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Sale of Student Loans Bill

Volume 467: debated on Thursday 22 November 2007

Order for Second Reading read.

I beg to move, That the Bill be now read a Second time.

The Bill concerns the prudent management of one of the Government’s public assets, the student loan book. Before I deal with its provisions, I will briefly explain the context and why the Bill is being introduced now.

The Government strongly believe that talent and hard work, not social background or where a person went to school, should determine success in life. We believe that no one should be held back from realising his or her potential at university because of fears of financial hardship. That is why we have been systematically breaking down the financial barriers to higher education.

First, we changed the nature of student loans, linking repayments directly to graduate earnings, and started collection through straightforward payroll deduction alongside income tax and national insurance once the graduate is in work and earning. Secondly, no home full-time undergraduate studying for their first degree has to pay tuition fees before they study, because there are now loans for fees. Thirdly, we have reintroduced non-repayable maintenance grants for students from low-income backgrounds, and last July my right hon. Friend the Secretary of State announced a significantly enhanced new financial support package for students, under which from next year two thirds of students will be eligible for non-repayable grants. In addition, we have ensured that universities are paying out non-repayable bursaries.

Fourthly, the package that we announced for next year offers a guarantee to those in receipt of the educational maintenance allowance that if they are receiving it at the age of 16, they will be guaranteed the amount of money they will get in student financial support when they go to university. We are also introducing for the first time the option of a loan repayment holiday of up to five years to allow flexibility and choice in repayment.

I am grateful to the Minister for giving way so soon. I did not realise that he was going to introduce the debate by outlining some of the measures to be taken. What arrangements will the Government make to give part-time students the same access to loans as full-time students, and also to extend that to both further education and adult students?

We are introducing the adult learning grants, which give for the first time an equivalent commitment to the education maintenance allowance. I am not in the business today of making future announcements, but I will say for the record that before this Government came to power there was no financial support whatever for part-time students. We were the first Government to institute a part-time student grant, and 18 months ago we increased that by 27 per cent. We also substantially increased the access to learning fund, initially from £3 million to £12 million. There are further challenges for us to face up to, but we have a good track record on this issue.

I congratulate my hon. Friend on the package of measures introduced this summer, which have made a fundamental difference in the level of student support. My right hon. Friend the Secretary of State deserves great credit for taking this issue up so swiftly. Does my hon. Friend agree that although this will be of huge benefit to all Members’ constituents, it is important to communicate the changes? What steps is my hon. Friend taking to ensure that students learn directly of the new package of measures, and also that tutors in schools and colleges are as well briefed as possible this autumn when students make their choices for next year’s university entrance?

I can certainly give assurances on that. We have launched a major communication campaign to get across the facts about the new system, including through TV, radio and online advertising. We have also made available a DVD setting out the facts for advisers and students. It is available to Members of Parliament as well, if they wish to engage actively in this process and inform their constituents.

In terms of this substantially enhanced package, it is worth saying for the record that those who predicted that the introduction of variable fees would lead to a reduction in the number of people applying to university—and particularly in the number of those from poorer backgrounds—are being proved emphatically wrong. Entry to university this autumn by English students is 6 per cent. higher than last year, and a higher proportion are from poorer backgrounds.

There is now a developing consensus in the House. The Conservative party has shifted its position from opportunistic opposition to the Government stance, which we welcome; they now support our position. Even the Liberal Democrats appear to be moving. I have always said that people should judge politicians not by what they say, but by what they do, and in government in Scotland the Liberal Democrats supported a system of postgraduate repayment that is absolutely no different in principle from the system that we have in England. I understand that they are now reviewing their position for England, and one of their think-tanks has even advocated outright support for the Government’s position. Therefore, I think we are creating a settled consensus.

The Minister has eventually goaded me to my feet. He knows full well that the changes in Scotland are not the same as those in England. The loan system there is not to pay for fees, so I think he should be careful in what he says.

All I will say to the hon. Lady is that exactly the same principle of postgraduate repayment applies in England and Scotland: the former student has to pay something back once they are in work and earning. That needs to be said for the record, because in the past we have often heard from the Liberal Democrats of their opposition to fees, whereas in reality they support that principle of postgraduate repayment.

The Government believe these reforms, alongside increased investment in higher education and the hard work of students and educators around the country, have helped increase participation in higher education to the highest ever level in this country. I am confident that it will rise further, and that is both socially and economically imperative.

We should be proud of our record of breaking down the financial barriers to education and widening participation, but that also brings an interesting challenge. As participation has grown, so too has the size of the Government-owned student loan book. According to the latest figures—those for the year 2006-07—the English loan book was valued at £18.1 billion. Of that, about £17 billion was accounted for by the new income-contingent loans repaid through Her Majesty’s Revenue and Customs. We firmly expect that the loan book will increase appreciably in the coming years. That projected growth makes it all the more important to give careful consideration to how best we can handle this large and growing public asset. The Bill concerns how the student loan book can best be managed.

This is a rerun of the debate that took place in 1997. I am sure that the Minister will recall the first student loans portfolio Bill, and I shall ask him something that I asked then. Will he put on record, at the start of this debate, the discounted rate at which the loan will be able to be sold off? Will it be 10, 15, 20 or 25 per cent.? In other words, how much is the Treasury prepared to give away in order to get this loan portfolio off its balance sheet and on to somebody else’s?

The previous sales demonstrated value for money. I shall not reveal a discount rate today, but I shall set out the value-for-money framework within which we will make those judgments. Were we to reveal the discount rate today, in what will be a competitive bidding process for people to purchase the debt, we would reveal our hand at the start of the process and fail to maximise the revenue to the public sector.

As always, the Minister is engaging with the debate, and I compliment him on that. Will he therefore give us the discount rate for the 1997 sale? That is a retrospective matter rather than one that deals with what is being planned for this sale.

I do not have that figure at my fingertips, but following this debate I shall happily write to the hon. Gentleman and set it out for the record.

Transferring ownership of large parts of the English loan book will allow us to reduce the risk of continuing to hold the loans on the Government’s balance sheet, and is expected to realise an initial £6 billion in receipts over the next three years. Having commissioned expert external advice from the financial sector, we believe that we will be able to conduct sales at a price that represents good value for money for the taxpayer. I think that we can achieve that.

The Minister related the sale to the Government’s balance sheet. I am no technician in this matter, but am I right in saying that the extent of the student loan book is not netted against the public sector borrowing requirement, which is the conventional measure of changes in the public sector’s balance sheet? Therefore, when account is taken of commitments such as the golden rule on economic management, what is being done today is not strictly relevant at all.

It is relevant. This mechanism has been supported by the Conservatives—indeed, the Leader of the Opposition supported it when we announced it in the previous Budget. Through this mechanism we are transferring risk from the public sector to the private sector, and in doing so, we are realising a capital receipt that can go back into the Consolidated Fund and used for other Government spending purposes. That is an important achievement.

I need to make one precise point clear at this stage. The Government will retain control of regulations, terms and conditions for all loans, and there will be no adverse change for borrowers, whether their loan is sold or retained.

I welcome the Minister’s commitment on that point. He is right that we should be clear on this matter. Will he assure present and future students that nothing in the Bill or in this transfer could result in information being passed to financial or marketing companies, and that the private sector can count on no such gain in its estimate of what it is prepared to pay?

I am happy to confirm that to my right hon. Friend, who I know has a long-standing interest in student affairs and in advocating the students’ case. For the record, purchasers will not be able to access any wider range of personal data or use personal data for any purpose other than administering student loans.

On the last point, before the Minister moves on to another exciting aspect of the Bill, can he clarify whether the safeguards sought by the right hon. Member for Oxford, East (Mr. Smith) are in the Bill and will be part of the terms of sale—the contract—or whether they will be covered by some other parliamentary mechanism, such as guidance or a statutory instrument?

I refer the hon. Gentleman to clause 6(4), which clearly states that personal information can be disclosed and used only

“for purposes in connection with a transferred loan.”

I might add that his definition of “exciting” clearly differs from mine.

The House will be aware that my right hon. Friend the Chancellor of the Exchequer made a statement on Tuesday on the breach of procedures that led to personal data relating to child benefit going missing from Her Majesty’s Revenue and Customs. My right hon. Friend rightly stated that that was an extremely serious failure by HMRC in its responsibility to the public. He also stated that immediate steps had been and were being taken to prevent that from happening again.

The Government take the protection of personal data, in whatever form, extremely seriously, and student loan data are no exception. The provisions catering for the sharing of HMRC information in the Bill will strengthen the framework for legal protection of HMRC data in respect of all loans, whether sold or unsold. The Bill will extend an existing criminal sanction prohibiting the wrongful disclosure of HMRC information outside the terms of the legislative gateway.

As I said, we will extend the legal protection of HMRC data in respect of all loans, whether sold or unsold, and we will also extend an existing criminal sanction prohibiting the wrongful disclosure of HMRC information outside the terms of the legislative gateway. I am sure that hon. Members will wish to explore that point in Committee.

I am grateful to the Minister for giving way again, but this is obviously a matter of great and current concern. Can he assure the House that in cases in which an official of HMRC or some other person has wrongly disclosed information, and an element of culpability in the management of that official has enabled the information to get out, the Government or the commissioners will—at least in principle—compensate individuals to the extent of their actual pecuniary loss for the leak of their personal information?

I need to be careful and precise about this, but the Chancellor set out those reassurances in his statement on Tuesday, and a review is taking place.

Following the statement on Tuesday, Lord Triesman, the Minister responsible for intellectual property, has asked the Student Loans Company to review its operations and data management processes. No breaches of data protection protocols have occurred in respect of student loan administration. Furthermore, we are certain that no data have gone missing in respect of student loan administration. HMRC has initiated a wide-ranging review of its security processes and procedures, and so naturally we are doing so for student loans, as are all other Departments for their data management processes.

HMRC has temporarily suspended its data-sharing operations with the SLC in respect of student loans while the measures described by the Chancellor are being put in place. However, repayments are continuing to be deducted from borrowers in the usual manner.

I apologise to the Minister for these persistent interruptions and I am grateful for his tolerance, but these are sensitive and topical matters. He has given us an assurance that checks have been made on the situation: I welcome that and acknowledge his diligence. However, the issue is surely whether the protocols will be in place, unaltered and with the same level of protection, under the proposed arrangements. If he can give us that assurance, Members on both sides of the House will rest more easily.

The best, most effective protocols possible will apply to both Government owned debt and privately owned debt. There will be no distinction and no difference in the way in which these matters are treated between the public and the private sector.

The idea of selling student loans is not new. The Government have successfully sold tranches of student loans in the past. In 1998 and 1999 there were two sales of the old “mortgage-style” student loans for a total of around £2 billion. The Government believe that there will be an appetite for these assets in the marketplace in respect of the Bill, not only because of the previous sales, but because of the distinctive characteristics that make student loans an attractive purchase. The loans would provide an investor with access to a new instrument with unique characteristics, allowing them further to diversify their portfolio, and a sustained income over a long period from a group of borrowers who, when taken as a whole, are considered relatively low-risk. Those features make the student loans an attractive candidate for purchase by a wide range of potential investors.

All transactions will be subject to a rigorous assessment that we are achieving good value for money. In making that assessment, the Government will examine the prevailing market conditions and ensure that a competitive market for the loans has been generated. The Government will also provide the market with full information about the loan book in order that the assets can be efficiently valued. The Government will ensure that there has been a genuine transfer of risk from the public accounts to the private sector. The Government will 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 their books, in terms of both likely income flows and levels of risk. As with the previous loan sales, the Government will draw on specialist advice from within Departments and from appropriate external sources. We will draw on NAO guidance in our approach to assessing value for money, and these judgments will of course rightly be subject to scrutiny by the NAO in due course.

Making a sound judgment about the timing and pricing of sales is particularly important given the recent turbulence in world credit and financial markets. It is not possible to predict the potential market conditions in the future, and the market conditions will naturally vary for different sales in a long-term programme, which is what we are talking about. Our intention is that portions of the loan book would be sold at regular intervals as part of an ongoing programme, and we will closely monitor the market so that sales can be made at the right time. Decisions will, rightly, always be informed by what provides the best value for money for the taxpayer.

The 1998 legislation, which enabled the previous sales, has been repealed, and so cannot be amended to enable sales of income-contingent loans. We are therefore introducing this Sale of Student Loans Bill, which will allow sales to take place while protecting the interests of all borrowers regardless of whether their loan is sold or retained. I give borrowers this reassurance: purchasers of loans will not be able to charge a different rate of interest; they will not be able to change the income threshold for repayments; and they will not be able to use a borrower’s personal details for any purpose beyond that which is required for management of the loans.

On that final point, does the Minister mean that the purchaser of the loan will not be able to change the interest rate without the approval of the Government? Can he confirm that this will not in any way restrict a future Government’s decisions over the appropriate interest rate?

That is correct, although I should state for the record that we have no plans to do so. Yes, that responsibility rightly rests with the Government.

Clearly, Northern Rock has got into serious financial difficulties recently, as we are all aware. If a purchaser of the loan book got into serious difficulty or undertook unacceptable practices, what safeguards are there that the Government would have any control over that situation?

We have detailed external advice that there is a secure market for this kind of transaction. I think we can go forward with confidence on that basis.

Several Members want to speak, so I shall move to a conclusion. Clause 1 allows the Government to sell some or all of our obligations relating to student loans, while retaining the power to require that purchasers administer the loans in a way that meets our requirements. Clause 2 gives the Secretary of State flexibility to include provisions in sales contracts to ensure that borrowers’ interests are fully protected. That means that borrowers of sold loans will be entitled to the same process of mediation to which all borrowers currently have access, further underlining the Government’s commitment to ensure that all borrowers are treated equally. The next two clauses extend that principle.

Clause 5 allows the Government to insist that the Student Loans Company continue to fulfil its current functions and remain the institution that will contact borrowers about their loans. That is important. Clause 7 explicitly confirms an existing understanding that all student loans are exempt from the terms of the Consumer Credit Act 1974 because their characteristics differ substantially from commercial loans. In Clause 8, the Bill provides powers for Welsh Ministers in respect of Wales, equivalent to those it proposes for the Secretary of State in relation to England.

As I understand it, the powers given to Ministers in the Welsh Assembly are known as mirror powers, not the framework powers usually associated with legislation such as the Bill. Mirror powers are limiting and only allow Welsh Ministers to proceed in exactly the same way as Ministers in the UK. Has the Minister received any representations about changing the mirror powers to framework powers?

I have received no such representations.

In conclusion, when the House last considered student loans the matter was of some controversy. In contrast, this is a short and mainly technical enabling Bill, and I hope that its purpose will not be misunderstood. Its provisions have no relation to future decisions on broader student finance policy, and will have no impact on the manner in which students can obtain financial support for their time in higher education; rather, the Bill enables the Government to manage efficiently a large and growing asset, and on that basis I hope it will be supported.

I commend the Bill to the House.

I had not expected the Minister to begin his peroration with a short statement in general terms on access to higher education. As he did so, however, may I briefly say that the Conservative party and the Conservative education team in Parliament are dedicated to the principle of widening access to higher education by all means? In that regard, and to reflect the intervention of the hon. Member for Harrogate and Knaresborough (Mr. Willis), may I add that one of the best ways of widening access is to look at modes of learning as well as at other factors? Part-time learning, modular learning and distance learning have a vital role to play in the mission of widening access and participation. However, that might be a debate for another day, Mr. Deputy Speaker, so I shall address the matters before us.

We welcome the principle behind the Bill. As the Minister said, it transfers risks from the public to the private sector, but in a measured and careful way. Indeed, as the Minister and the House will know, at the last two general elections the Conservatives advocated similar plans, so it is ironic that the Minister suggests that we are imitating the Government—ironic that the Government’s plan for the sale of student loans appears to be on loan from the Conservative party. However, when we announced our plans, we proposed that the money raised should be used to endow universities—a point to which I shall return.

The Bill is short and, seemingly, straightforward, but I want to bring a number of issues to the House’s attention. They will no doubt be scrutinised in detail in Committee and when the Bill goes through its other stages before becoming law.

Does the hon. Gentleman not think it odd that the Minister’s excellent presentation of the Bill missed out a key area—what will happen to the money? Does the hon. Gentleman feel, as I do, that as the Bill is a Department for Innovation, Universities and Skills matter and the money is collected from university students, at least some proportion of it should be guaranteed for the support of higher education? That may accord with his theme on endowments, although I would not necessarily agree with that specific policy.

Far be it from me to make a spending commitment on behalf of the Opposition. I have been around too long to be seduced into going down a road that it would not be in my interests to travel, but I will return to the matter that he raises in general terms later during my, I hope, relatively short speech—at least, short by my standards.

According to the explanatory notes to the Bill, the intention is to enable

“a programme of sales of student loans, as announced in paragraph 6.42 of the 2007 Budget Report”.

Indeed, the Minister made reference to that. Paragraph 6.42 states that the sale of part of the student loan book

“will raise around £6 billion by the end of 2010-11.”

We have already discussed the turbulence in the financial markets. The Minister will appreciate that there are understandable concerns therefore about whether this is the best time to conduct such a sale. I suspect that he knows well that it is not, and I hope that he will comment on that when he responds to the debate.

The student loan book was valued at about £18.1 billion at the end of the 2006-07 financial year, but I have no doubt that the Minister will have estimated the face value of the book in 2007-08. He has already suggested that further projections have been made—indeed, “projections” was the word that he used. It would be useful in considering the Bill if the House were to have some feel for the nature of those projections. It is true that there are commercial sensitivities, but if we are to consider the Bill with the proper diligence that the House and the hon. Members currently represented here certainly would wish us to do, we should have some sense of the notional estimates that the Government have made and that their advisers have offered. Will the Minister therefore say a little more about those projections? The hon. Member for Harrogate and Knaresborough intervened on that subject when the Minister was on his feet.

I appreciate that it is not necessarily the Government’s intention to conduct the sale at the moment, but there are good reasons to be concerned that a sale might be rushed and the taxpayer consequently short-changed. Figures released this week show that public sector borrowing stands at £24.2 billion in the financial year to date—the highest figure for the first seven months of the year since 1994-95, and £6.7 billion worse than last year.

Before my hon. Friend leaves the point, will he remind the House that the former Chancellor of the Exchequer—now, of course, the Prime Minister—took it upon himself to sell off a large chunk of the Government’s gold stock in extremely adverse conditions, far ahead of what was possibly appropriate?

I am grateful to my hon. Friend for his advice. There is nothing worse when speaking from the Dispatch Box than for an altogether more sagacious colleague to intervene and anticipate the next few lines of one’s speech, is there not? My hon. Friend, who is always one step ahead of me, has done just that, for I was going to point out—

I am trying to encourage the hon. Gentleman, when he gives the answer to the hon. Member for Daventry (Mr. Boswell), to include in his remarks what happened in September 1992, when a former Chancellor, Lord Lamont, lost £15 billion in a week.

Order. I do not wish to interrupt the debate, but I encourage the hon. Member for South Holland and The Deepings (Mr. Hayes) not to go too far down either of those roads.

Mischievous voices in the House are encouraging me to do things that you would not want me to do, Mr. Deputy Speaker. I will not allow them to have their way.

It is important for the Minister to assure the House that the sale of student loans will not be rushed to fill a hole in the public finances. It is true that we have had some experience of that kind. Our fears are legitimised by those sorry experiences—those of the kind mentioned by my hon. Friend the Member for Daventry (Mr. Boswell).

The Minister must also explain how the estimate of £6 billion has come about. With an estimated face value of £18.1 billion, what mechanisms were used to arrive at the estimated £6 billion, which is what the Government say is likely to be raised, for the sale of the loan book? What proportion of the asset do the Government estimate they will need to sell to raise £6 billion? What is the expected time scale for the sale of the loan book, and what are the notional volumes? The Minister said that the Government were likely to sell the loan book off in parts, but he gave us no feel for what estimate had been made of the timetable for that or the size of the parts. Again, one appreciates that there are commercial necessities in this regard, but the House deserves a little more information than we have had thus far.

As the right hon. Member for Oxford, East (Mr. Smith) suggested, it is also important that the House and the wider public are absolutely assured about any possible impact on students. The Minister has been helpful in that regard, both privately in briefings and today in the House. However, let us be frank: there will be fears and worries about this matter among existing students, potential students, families and so on. Anything that disincentivises people who have the capacity and potential to study at university or college needs to be countered. Those assurances will need to be made repeatedly during the passage of the Bill.

The explanatory notes state:

“No aspect of this Bill will create a material impact on borrowers, higher education institutions or employers.”

As a result, no regulatory impact assessment has been prepared or published. However, clause 5(2), which covers repayments, states that

“regulations or arrangements may provide for…collection by a person acting on behalf of a loan purchaser”.

Will the Minister clarify whether there is any intention to involve anyone else, besides the Student Loans Company, in the collection of repayments? If there is not, I am not entirely clear why that provision has been included.

It would also be useful if the Minister told the House whether any assessment had been made of the likely purchaser of the loans. He made it clear that there is a market. He has also told the House this afternoon that the Government have taken expert advice on the subject, as one would expect. I would also expect him to give the House some feel for the sort of organisation that might purchase the book. Where are those organisations located? Are they overseas companies, international companies or domestic organisations? What is their track record? Who is likely to be involved? He does not have to stray into the area of commercial sensitivities, which would jeopardise the sale, to give us some reassurance about how he thinks things might work out.

I doubt that very much, but I am grateful to my hon. Friend for giving way. Does he think that there are legitimate concerns about the possibility of secondary, or indeed tertiary, sales to indeterminate groups of people? Drawing an analogy with the collateralised debt obligations, for example, there is a real possibility that, however much the Secretary of State wishes to protect students, control of the loan book will be lost to persons unknown and highly divergent from the ones to whom it was originally sold.

My hon. Friend is right: the book is likely to be sold on. That is the nature of this kind of business. The absolute assurance that the House seeks is that nothing is likely to occur that will jeopardise the circumstances of students or institutions of higher education. It would be difficult for any Minister, of any party, to predict how the situation might pan out. The book could be sold on over a period of years. However, allowing for that difficulty, some feel for the sort of advice that the Government have been given, some understanding of the projections they have made, and some estimate of how they expect matters to be concluded, is the least the House deserves. The House will certainly want that, both today and during our further scrutiny of the Bill.

As the Minister will appreciate, another issue on which there is widespread public concern is data protection. We had a useful exchange on that earlier. Clause 6 extends previous legislation to allow data about borrowers that is held by Her Majesty’s Revenue and Customs to be passed to loan purchasers, or potential purchasers. The Bill makes it clear that where information is shared with potential purchasers for the purpose of considering the purchase, details must be anonymised, but of course recent difficulties were about not theory, but practice. It may be necessary for the Minister to reflect on events and consider those details once again. I do not expect him to come up with an answer off the cuff today, but we might usefully consider the issue during the passage of the Bill.

In the light of recent events, I would not be surprised if we came to a conclusion that was agreeable to Members across the House to strengthen protection. That would be helpful to Government, to the House, and to people affected by the legislation. It is our intention to scrutinise closely that aspect of the Bill and, if necessary, to propose amendments, if we feel that data protection is not adequately dealt with in the measures before the House. I do not want to stray into further discussion on the loss, disclosed by the Chancellor, of the details of 25 million benefit recipients. We had a word about it earlier, and it is unfair to rub salt in the wounds; I would be the last person to do that. However, I know that the Minister will have heard the story with horror, knowing that he was coming before the House today to debate the issue before us. He will be very sensitive about it, so I expect him to offer the House and the public reassurance that he will tighten the provisions of the Bill, in the same spirit as that in which I offered to assist. We have a history of working together on legislation to best effect.

On the proceeds of the sale—a matter raised by the hon. Member for Harrogate and Knaresborough—there are no provisions in the Bill for the hypothecation of proceeds for reinvestment in higher education. We can therefore assume that the receipts will swell the Consolidated Fund, as the Minister confirmed that in reply to an intervention. I am certain that he will today wish to pledge to the House that higher education will get its fair share of the windfall. He would not be sticking up for his brief and defending those over whom he has stewardship if he did not do that. I would like to hear him make that firm commitment before the end of today’s proceedings.

I would like the Minister to speak in a little more detail, with full technical embellishments, about the position regarding Wales. He has a bit of a record—not a happy one, it has to be said—when it comes to dealing with legislation relating to Wales. Some of us remember the Further Education and Training Bill. It will worry him to hear that I have already received representations about the aspects of the Bill relating to Wales, on matters that were mentioned by the hon. Member for Brecon and Radnorshire (Mr. Williams). We need to be assured that those matters have been taken fully into account. Again, we will want to scrutinise that in some detail in Committee. As the Minister will recall, procedural concerns were raised with regard to the extension of powers to the Welsh Assembly when we discussed the Further Education and Training Act 2007; that was when we last faced each other in discussions on legislation.

This is the second time in the space of a few weeks that I have faced the Minister on an occasion when he has felt obliged to adopt Conservative ideas. The first occasion was when, in a damascene conversion, he accepted Conservative arguments about the Learning and Skills Council’s intervention powers in further education colleges. Once again today, a Conservative idea is being embraced by the Minister. It is often suggested that imitation is the sincerest form of flattery, but as Adlai Stevenson once said, “Flattery is all right so long as you don’t inhale”.

The Minister will not face much dissent and argument today. It is not as if the House is rising against him. It is clear that the Opposition spokesman, the hon. Member for South Holland and The Deepings (Mr. Hayes), who expressed his support for the Bill at some length, if I may say so—in fact, I would suggest to him that he record his speeches on a CD and pop them in the post—did not say that the Bill would be opposed. I wait with excitement to hear what the Liberal Democrat spokesperson, the hon. Member for Brent, East (Sarah Teather), will tell us, if she survives long enough to make a speech—I was coughing in sympathy at one stage.

The Bill is not contentious, but I have one or two criticisms that I shall put on the record. First, we are putting a lot of bundled debt, whether that is called collateralised debt obligations or structured investment vehicles, on to a market already saturated with such debt vehicles, which were the major cause of the problems that the markets began to face in August and are still facing. The market is choked up with bundled debt which is not immediately saleable. As soon as there is a credit squeeze or restriction, the Gadarene instinct of hedge fund managers to get out is impossible to realise. In the States, therefore, funds have closed down and there have been problems in this country with that debt.

The Government intend to put a massive dollop of debt—£18 billion—on to a market in such a state. It is not a good time to sell. The Minister said that he has had advice that it is saleable and will be well supported by the markets, but that reflects the self-interest of those who give the advice, who are mainly people connected with the markets, who want to see them expanded and used. I am worried on that account.

If the debt is sold on, there is no restriction in the Bill, as far as I can see, on the purchaser selling it on to someone else. Where will the student loan fund end up?

There is concern on that point and questions need to be answered. Financial debts are sold on the markets. Risks are sold on in markets. As it moves around the market, there is a possibility that the risk may end up within an institution that is underwritten or guaranteed by Government. It could have ended up on the books of Northern Rock, for example, in which case the taxpayer would be underwriting it. The hon. Gentleman raises an extremely important point.

I am grateful for the intervention. It is possible not only that the debt will end up in the assets of a fund or organisation supported by Government, but that it will end up in the assets of a fund that is on the verge of collapse. A Government permission should be necessary for the transfer of the debt once it gets on to the market, because we cannot be sure where it will end up.

Secondly, the measure is based purely on ideology and doctrine, according to which public debt is a bad thing and private debt is a marvellous thing. It is clear that financial markets object to public borrowing because they want the privatisation of all borrowing, as well as the privatisation of credit creation, which has happened to a large extent. There is no reason why the money should not stay on the public books. The only argument that the Government put is that it reduces the public sector borrowing requirement, but that effect is purely presentational. In the main, I would argue that public borrowing is good and private borrowing is often bad; the private debt situation has produced an enormous escalation of asset and house prices, while public debt and borrowing has produced investment and economic growth, and allowed the Government to steer the economy forward.

The equation of public with bad and private with good is nonsense. There is no reason, ideologically, for such a transfer; there is no reason to sell the asset books. All that does is pretty up the PSBR figures. There is no guarantee that the money coming in—the Minister mentioned £6 billion—will be used for education. The National Union of Students, and the universities, I think, say that the money should go to education. I agree, but it will not—it is just going to general Government funds.

My third point is that the private sector is not buying the debt out of sheer altruism or a love of supporting the student loans programme and getting more people into university. It is doing it for solid commercial reasons, and it will have to be paid. In the current state of the market, it will have to be paid substantially more to take up the debt than it would had the crisis of August onwards not happened. It has to be well paid for the risks.

And there are risks. I remember that when I was a university teacher in New Zealand, there was something called the post-primary student bursary, which gave students who committed themselves to going into teaching a teacher’s wage to go through university. That was a marvellous institution that encouraged people to go to university. However, when the students left university, they disappeared; many went to teach in England to relieve the crisis in education at that time—this was the ’60s. People in raincoats from the education department used to knock on my door and ask whether I knew where student Fred Bloggs was. I knew that Fred Bloggs had gone overseas, but did I know his address? Where did his parents live? Such situations give rise to problems.

Two years ago, I purchased a fantastic palace in Grimsby and ever since I have been plagued with telephone calls from the Student Loans Company asking about the whereabouts of a girl whose name I shall not give. She was in receipt of a student loan and, apparently, absconded. I did not know the woman. She had never lived at the house; at least, nothing on the records of previous owners indicated her name. However, she had taken out a student loan and disappeared. Considerable expenditure will be necessary to trace such people and the private sector will want to be well rewarded. We may be getting money off the public books, but we will have to pay the private sector substantially to handle it.

In passing, I should like to put a query to the Minister. I see from the Directgov website that European students from both the European Union and the European economic area are eligible for student loans if they

“have been living within the EEA and Switzerland for the three years immediately before the start of the course”.

The explanatory notes to the Bill discuss the recovery of

“student loans made to borrowers domiciled in England (and those studying in England but based overseas) at the time the loan was taken out.”

If there are problems, overseas students will be difficult to trace, assuming that they have gone back to their EU country; Turkish, Swiss and Norwegian students are also going to be eligible. All that will impose an extra cost. How will that be financed? When it takes over the loan book, will the private sector toughen up on all that, and what kind of charges will it impose on the Government for providing the services to trace people?

Finally, I come to my main point, which relates to anxieties to which I am sure the Minister will respond. There is the issue of the terms of the student loans. We sensibly geared the interest rate to the retail price index as we do not want massive interest charges. That gearing has reduced the interest payable on loans throughout the long period of low inflation under this Government; indeed, it has reduced it substantially on the interest rates payable in the early 1990s under the Conservatives.

However, inflation has gone up, although not because of anything that students have done—it is all due to utility prices. The interest rate is now 4.8 per cent.—double last year’s 2.4 per cent. I have had calls from parents in Grimsby warning me about this and saying that it will have a disastrous effect on their daughter’s or son’s finances. Assuming that a student loan averages £15,000, they will be paying £720 a year, or £60 a month, in interest before they even begin to pay off any of the debt. That will be a monstrous burden for people starting out in life; they will start life’s race with a ball and chain on their foot. I hate to think of the prospect of a student who marries a student, with two student loans merged as a double burden on that household.

This burden is completely unacceptable, and it is likely to get bigger. It will put people off taking out student loans and be a burden on those with loans who are starting out in life and might want to take out a mortgage, buy furniture or a car, or want to contract other debt. We have a debt-burdened society, and we are asking students to start out in it with a big debt already trailing behind them. It is not recoverable under the tribunals and enforcement legislation that we passed in the summer. That will become a political problem for my Government.

The Minister said that it will be up to Government to vary the terms of student loans even after they have been privatised. I am glad to hear that, because they should wipe out the interest charges. I cite the precedent of the New Zealand Labour party, which promised in its 2005 election manifesto to write off interest on student loans, as it now has. The student gets a statement at the end of the year saying that a certain amount of interest is due, but it is written off and does not have to be paid. That was enormously effective and very necessary.

Surely, even as a good socialist, the hon. Gentleman is not arguing that students should be given significant amounts of money interest-free by the Treasury so that they can put it on the money market and receive interest. Surely he does not think, even in his wildest dreams, that that is a good idea.

I take that correction from a fellow socialist. Of course I do not envisage that students will put it on the money market; that is what the Government are doing, not what students will be doing. Students use the loan for living. In the previous generation before student loans existed, most students struggled with enormous overdrafts or credit card debts. I am saying that the burden of debt on students for educational purposes—the prime purpose of these loans is to pay the fees—should be written off, as long as they stay in this country. I do not want to extend it to people who leave this country and work elsewhere having used their degree to put themselves on an international market, as that would make the burden too heavy to bear.

I am trying to help the hon. Gentleman in his hour of need. Clearly there is no point in loaning somebody something for no interest at all; one might as well give the money directly to the university and not charge the fees in the first place.

We could certainly do that. I hesitate, as a good West Riding man, to take help from Harrogate in any form—it is usually class-biased, in my view. Money could be paid to the university, but we are talking about a debt incurred by the student, which they have to bear, and with which they should be helped. Ideally, they should all qualify for means-tested fees, as my generation did. The Government say that we cannot afford that, which is probably true. We cannot afford to finance with grants some 46 per cent. of the population going on to higher education. Only 4 per cent. of my generation did, and we all got grants. I had lots of doubts about kicking away that ladder, but having kicked it away, we have to try to help the students.

Does the hon. Gentleman think that a burden of 4.8 per cent. is acceptable for students to carry? I do not know. I would be interested to hear the views of the Liberal Democrats on that. It is too high and too heavy. Something should be done about it, and I hope that the Government will. I am sorry for the diversion into the realms in which I have just been wandering, but we should think seriously as a Government and as a party about following the New Zealand example and writing off the interest payment for students.

On a point of order, Mr. Deputy Speaker. Are you aware that because the Government have refused to make a statement on the new airport policy, copies of the document that were placed in this House have now run out? People who were not able to question the Minister have sought the document, and there are now none available. Is that really acceptable?

As I understand it, 40 copies of that document were produced in the Vote Office. Clearly, those have now run out. It is not good enough for it not to be available to Members of Parliament who need it. I am sure that the Department is aware of what has happened, and I trust that it will put matters right as quickly as it possibly can.

By the looks of this packed House today, the Bill has generated enormous excitement and controversy in all parties. We will support the Bill, but we have a number of reservations that we would like to develop further in Committee, including the matter of how the Bill relates to Wales. I know that my hon. Friend the Member for Brecon and Radnorshire (Mr. Williams) hopes to catch your eye in a few minutes, Mr. Deputy Speaker, to raise that point.

It is worth putting it on the record that my party would not have started from this point. The so-called asset that the Government seek to sell today is the burden of debt that they have imposed on students since they came to office. The total student debt of £18 billion is more than the gross domestic product of Slovenia, believe it or not. It represents a millstone around the neck of each student who has graduated under this Labour Government. The truth is that we do not really know what the implications of the debt will be for a whole cohort of graduates throughout their lives. We have been engaged in what essentially amounts to a giant experiment. We do not know what effect it will have on their career choices, or on their decisions about whether to have a family, get married or buy a home. We will not know that for another 10, or even 15 years, by which stage it will be too late for us to turn back the clock.

Despite the Minister’s assurances, many graduates now struggling to pay back their student debt on what are often quite low new graduate salaries remain concerned that the selling of the debt to a private company could be a precursor to raising the interest rates to commercial levels. I am pleased that the Minister denied that point on the record, but I wish that he would include it in the Bill, to reassure students who are likely to have their debts sold off in future, and graduates, who will be affected by this change.

Graduates already face a hike in the interest rates on their loans this year. The rates have doubled to 4.8 per cent., as the hon. Member for Great Grimsby (Mr. Mitchell) mentioned, from 2.4 per cent. last year, due to the slightly bizarre way in which the Government calculate interest rates for student loans. It is not just that they use an entirely different inflation figure for students from the one they use for other purposes, but the rate is not even averaged over the year. It is set arbitrarily on the basis of one month in March. If that month happens to be one in which oil prices are running high, and there are hikes in utility bills, for the rest of that year students will pay the cost in their interest rates. Students are concerned that this is the beginning of a domino effect. They saw fees, then top-up fees—and may assume the raising of the cap—and then the introduction of commercial interest rates. They would welcome the sort of assurance that I mentioned—the Minister including something clearly in the Bill to demonstrate the Government’s future intentions. They can always amend it later. We have seen plenty of amending legislation from the Government in the past 10 years.

The Minister is adamant that although his Department is leading on the Bill, it is not about higher education and will have no effect on students or universities. It is merely a short-term tactic to raise immediate revenue for the Treasury and to offload risk on to someone else. If we are to accept the Government’s argument about offloading risk, are we sure that anyone would want to buy the student loan book? The loans are riskier than the mortgage-style loans that were sold, and it takes longer to pay them off. They were income contingent, so if income levels drop the loan repayments will dry up. Any investor would be gambling on the future of England’s economy.

The hon. Lady and I broadly agree, but she is on slightly shaky ground with her last point. I suspect that the opposite is true. The loans would be a relatively secure product to buy. The risk is spread widely and the record of defaulting is small. I would think that they would be an attractive proposition. However, the hon. Lady made a good point about when they will be sold, to whom, on what time scale and in what chunks.

Let me develop the point. What about those students from the European Union whom we have discussed? That is especially relevant as more students move around. What happens if students move abroad? Are they more or less likely to default? With a free market in higher education across Europe, are we sure that such loans will always be a secure investment? I am not quite so sure. Those points need to be explored.

What requirement is there for HMRC to pursue those students who fail to pay back their loans? If the buyers of the student loan book are to rely on HMRC’s competence to realise the value of their purchase, this week will have fatally undermined the price of the assets on offer.

The hon. Member for Great Grimsby referred to debt bundles, and he made a good point. With the lack of liquidity in the financial market today, there is a serious question about whether any bank would want to take on the risk of buying the student loan book. If banks are loth to invest at the moment, there is a risk that the Government will have to sweeten the deal heavily to interest buyers.

A number of hon. Members have asked how large a discount the Government will need to give to investors and what proportion of the book they will sell to raise the £6 billion. The Minister has consistently said that he cannot answer because that would reveal all the Government’s cards to investors, but the cat is out of the bag. We know that the Government’s finances are tighter this year and that there is a greater squeeze on spending. Selling the student loan book under those circumstances is rather like advertising on lastminute.com: “The plane leaves in 24 hours, all tickets must go. Any price accepted.” We should perhaps be a little concerned that there is a risk that the Government will put in far too great a sweetener, which would lower what is good value for money.

How will the Government decide what is good value for money? How will we know what they have done to establish that? If the Government do not reach a deal that is good value for money, will they postpone the sale, or proceed anyway? They will need to receive a capital amount to balance the books this year. The Tories did at least postpone the sale in 1996 when they failed to obtain a good price for the taxpayer.

The problem is that the Government’s record is not good. The forthcoming National Audit Office report on QinetiQ, which we expect to be published tomorrow, is a prime example. A large stake in the defence firm was sold at rock-bottom prices to the Carlyle group and then floated on the stock market, which made the group a hefty £300 million profit. That is a prime example of what happens if we do not ensure that we get value for money at the time.

If the Government succeed in selling the student loan book at a level they believe to be fair, will they undertake to report to the house on the details of the sale before proceeding with further sales? That is the point that my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) made when he asked the Minister to put on the record the discounted rate for the previous sales. I accept that we will not know all the details before the sale, but if the House is to have confidence in what the Government are doing we need to know the success rate that they have achieved so far.

From the investors’ point of view, it is not clear how they will know exactly what they are buying unless the Government intend to release much personal data about the loans. The Minister said that all the information for potential purchasers would be anonymised, but I cannot understand how investors could genuinely appreciate what they were buying without knowing far more about those who owe the debt. That raises concerns.

What will happen if students default on their payments? The hon. Members for South Holland and The Deepings (Mr. Hayes) and for Great Grimsby asked about that. Will HMRC pass on information about individuals to the new owners of the debt? What data will be passed to them? What safeguards will be in place? Will HMRC or the new loan owner be responsible for chasing up those who default? How will the relationship work? How will the data be transferred? I presume that the Minister does not want the Opposition to give him details of a reliable courier company, and that a better system will be used in future. There was some hubris in the Government’s reference to their intentions on data protection in the Q and A that the Department released. I suspect that no hon. Member will be as ready to accept the Government’s reassurances about the matter now.

What will happen when the initial purchaser sells on the debt? The hon. Member for Daventry (Mr. Boswell) made that point in interventions. Are the Government genuinely saying, as the Minister told me in private, that they will undertake to draw up a new agreement and contract with any new purchaser, all the way down the line, regardless of the way in which the debt is broken up, the number of people to whom it is sold on and whether it is sold here or abroad? What data protection will be in place as the debt is passed along the chain?

The Government trespassed on principle long before we reached this point, when they decided to impose large debts for higher education on students just as they start out in life. There are few points of principle in the Bill, but it contains several holes that leave graduates in uncertainty. I hope that the Minister will turn his mind to them in Committee. However, for now, we are content to let the measure through.

We are nearing the end of a bad week in Parliament for the Government. However, at last a Bill has come along that we can describe as reasonably sensible. It will have my support today.

I have a circumscribed role in higher education as, first, a member and officer of the all-party university group and, secondly—the Minister and certainly the hon. Member for Brecon and Radnorshire (Mr. Williams) will be interested in this—a relatively newly appointed governor of a Welsh higher education institution. We shall watch that interface with interest.

However, given that it is more than a decade since my service as a Minister with responsibility for higher education, it is not appropriate for me to debate contentiously or dilate on details of the past. I can say fairly that I floated the idea of doing something along the lines that the Bill suggests and that I have supported the principle of doing so ever since. I welcome the widespread consensus that has been achieved on that. If we consider the reasons for not doing that at the time, it is fair to say that, in the early days of student loans, there was less experience of the repayment compliance. Since then, there has been greater refinement of financial instruments and, perhaps most importantly, the underlying asset has escalated in value. The asset, allowing for another year’s issue of loans, would now approach roughly £20 billion. That is four or five times the value of a decade ago.

However, the Bill is essentially a Treasury measure. It is not about the Department for Innovation, Universities and Skills or about education. It needs assessing for its economic impact and, as several hon. Members who contributed interestingly said, the critical issues are the conditions and timing of any sale that the Treasury makes or drives. There is no more explicit disclaimer of the Department’s involvement than that in paragraph 42 of the explanatory notes, which states:

“No aspect of this Bill will create a material impact on borrowers, higher education institutions or employers.”

If that is the case, one is driven to wonder what on earth the Minister, much as I like and respect him, is doing discussing the Bill. Where is the Treasury, which is in effect controlling the legislation? However, we are pleased to see the Minister here and he explained the Bill very well.

The Bill’s primary importance is economic, although there may be secondary implications for students and the sector. It is clear from this week’s events that even if—this would be an impossible task and I do not anticipate that it will take place even in the near future—the Government could sell off, at one gulp and at an early date, all the student loans, the total proceeds would fall below the total amount of current Government lending to Northern Rock. In a sense, things have not gone down the pan, but that is at least the scale of the commitment.

It is perfectly proper for Ministers, whether Treasury Ministers or Education Ministers, to say that the sale of a loan as a Government asset—a loan is of course an asset—is an alternative to further Government borrowing. Indeed, doing so may introduce some welcome flexibility in the Government’s financial affairs. I have no difficulty with that. However, my hon. Friends and others are right to say that we are entitled to ask the Minister to give some indication of the deal that his Department has done to recover the proceeds from the Treasury. For example, are we talking about an enhanced capital programme for higher education institutions? If we are, will it be a genuine enhancement of the resources available to higher education or will it merely be a substitute for others that would have been available?

Those are general questions about the Bill. There are also some interesting technical questions that are worth probing more in Committee and to which a number of hon. Members have already referred in interventions or speeches. There is an interesting and essential tension between the number and nature of the safeguards available as far as student confidentiality is concerned and the number of players involved. Ministers have rightly fallen back on the overriding guardianship role of the Secretary of State. It is worth noting that the Secretary of State’s obligations are set out clearly in paragraph 15 of the explanatory notes. I should make it clear that those obligations fall on him, and are not demitted to individual civil servants, whether senior or junior.

One of those obligations is to ensure that correct repayments are taken. A second one is to protect borrowers’ personal data and to make arrangements to allow borrowers to discuss issues that have arisen in the course of their borrowing. Those are entirely proper public functions that sit with the Secretary of State. We cannot have arrangements that are seen to muddy those responsibilities, either within the Department or with regard to the subsequent control of the loans.

I mentioned this in an intervention, so I will not speak about it at length, but we know from the history of collateralised debt obligations that loans can easily be, and in fact are likely to be, chopped up and repackaged, and can involve a large number of players, some of whom, even if we know who they are, are likely to be outside the jurisdiction of this country and the Secretary of State. At best, when all those people are involved, sensitive data can leak. Indeed, there will be people looking for that to happen, perhaps in order to relate the names to other credit references that they may have. At worst, the data could be actively abused. At any rate, it is clear that the audit trail is bound to lengthen unless it is controlled.

The next issue is the nature of the risk being transferred. In a sense, that is as long as a piece of string, and whatever risk is being transferred will have to be made explicit to potential purchasers, who will make their own judgment on it. If we consider the old mortgage-style loans, we will remember that there has always been provision for mortality—which, sadly, occurs—and for other non-repayment because the conditions had been fulfilled for writing off the loan after a finite period of years.

I have some sympathy with the comments of the hon. Member for Brent, East (Sarah Teather) about this matter. There are now issues about the susceptibility to changes in economic conditions and the potential for default. I hope that the Minister will say something about the experience of active default as opposed to the writing off of a loan under permitted conditions in the existing arrangements.

The Minister and I have previously debated the merits or otherwise of the old mortgage-style loans that I used to operate, and I do not want to reopen that debate. I am certainly not saying that we should bring them back now; we move on. However, for borrowers, the terms and obligations attached to those loans were fairly clear. That might not be the case with income-contingent loans, not least because the level of income might not be clear.

I say to the Minister—as I would say to his Treasury colleagues if they were supporting him on the Front Bench today—that if one is prepared to take a big enough discount, anything, even a sub-prime mortgage, can be got away at a price, but it will only be a severely discounted one. I believe that the Minister is right to keep his powder dry, despite the blandishments of the Liberal Democrats, about the precise conditions under which he is going to sell. I would be the first to complain if he engaged in a fire sale of this very valuable asset. However, he needs to know what he wants to sell, and purchasers will need to know what they want to buy.

This brings me to a further issue. I am sorry if this point is something of a King Charles’s head for me, but I make no apology for repeating it, because I believe that it is important. There is the potential—not the actuality—of a scandal in the making over the question of outstanding student loans that are outside the Secretary of State’s jurisdiction. The Minister has been perfectly reasonable and reassuring in relation to loans within the British envelope. Most people pay PAYE, and most student loans are recovered through Her Majesty’s Revenue and Customs. We understand from what the Minister has said today that, thank goodness, there has been no breach of security in that regard. We accept his assurance and we are pleased about it. However, a significant minority of loans are given to qualifying persons who are not British nationals, including European Union students and those from within the European economic area, and to British nationals who subsequently become resident abroad and do not pay UK income tax.

The convenient arrangements involving recovery through the Revenue do not apply in those cases. As I understand it, the Student Loans Company is responsible for the collection of those debts, in accordance with the rules. Incidentally, it is also responsible for any voluntary payments that people might make to wipe off their debts, which is welcome. The Minister should tell the House whether there is a material sign of any differential impact between home graduates, if I may call them that, and those resident overseas. I would not be surprised if there were growing evidence of default by those who have passed outside the range of the Revenue and are now difficult to pursue. Without wishing to make a derogatory remark, I must point out that this is similar to the problems of enforcing judgments against foreign drivers, for example.

The Minister needs to take this issue seriously. If word gets out on the street that someone can take out a student loan in the United Kingdom—we are obliged to offer it—but that they do not need to pay it back because they have moved out of the system or because they are a Brit who has moved abroad, in effect to escape from the loan, that would be very bad news. It is disadvantageous to our own resident students, and it makes less money available for other public purposes in the long term. I hope that the Minister will say something about compliance in the context of foreign-resident, as opposed to home-resident, graduates.

This will obviously be a Committee point, but I think we should consider whether purchasers will be obliged to take a proportion of accounts of persons who are resident abroad as part of the package, or whether it is conceivable that a separate package might be offered consisting of persons who are exclusively resident abroad—Student Loans Company cases, rather than Her Majesty’s Revenue and Customs cases.

Perhaps the Minister will allow me a hypothetical example which I think is at least worth considering. If a Lithuanian bank felt able to secure a package of loans extended only to Lithuanian nationals who had come to the United Kingdom to study, and then to attack them under Lithuanian debt laws and get a faster rate of return than it would by going through the front door—in other words, the Student Loans Company—that would be a differential and might even attract some concern in Europe. If nothing else, it should be considered whether there is any distinction in practice that makes the position of students either easier or more onerous depending on whether they are resident in the United Kingdom or abroad—whether as an English, or British, national or as a foreign national—that would amount to a loss of that famous and desirable concept, the level playing field. To put it simply, it would not be fair.

Although the Bill is narrow, a number of Members have referred to some of the wider policy contexts. As we are lucky enough to have an Education Minister present, I think it reasonable to make a few brief comments of that kind.

There are major long-term issues in the Bill, for all that it is Treasury-driven and will be Treasury-directed, which relate to the real world of students and, indirectly, to the health of higher education institutions and the overall health of the sector. As my hon. Friend the Member for Havant (Mr. Willetts) has said in the past, once the Department has settled down after its initial separation from the other education Department, it needs to make an early start on appraising the impacts of the present fee regime ahead of the 2009 review. In fairness, the Minister has quoted figures for recruitment which will be relevant to that, and which I welcome.

As a whole, the present position is encouraging. The Conservatives, too, are interested—certainly I am interested—in access for people who, although they are from disadvantaged backgrounds, have the same potential as, or even greater potential than, some of their counterparts. We need to discover whether there are differential impacts, not just according to social class or income but relating to the pattern of offers among part-timers and mature students.

The other day I went to talk to a group of sixth-formers. I was a little disappointed when someone who seemed bright enough to qualify for university said very definitely, “I am not going.” When I asked,, Would you mind telling me why?”, the reply was, “I am worried about debt.” That was a one-off—it may have been the word on the street, and it may not be typical of students collectively—but it is depressing nevertheless.

The Minister may be aware—it has featured in earlier debates—of my concern about the cumulative effect on marginal tax rates of income tax—perhaps even paid by quite junior people at higher rates—national insurance contributions and student loan repayments. I can never remember what the acronym is supposed to stand for, but some social scientists have referred to members of the so-called iPod generation, who incur, in effect, a marginal tax rate of over 50 per cent. at a very young age, which I think is worrying.

That also plays into wider issues to do with life profile and life chances. People who are repaying onerous student loans might at the same time be founding households or thinking for the first time about taking out a mortgage—and, as we all know, they ought to be thinking about their pension, too, when there is a chance that compound interest will give them a worthwhile pension.

In saying that, I do not seek to subvert anything the Minister has done. A good job was done collectively in Committee on proposed higher education legislation in getting a better student package. I am happy in some respects about that. We cannot anticipate the review, but we should emphasise that it is important and that it is about sustaining access and at least controlling the burdens on graduates even if they have a better future income stream.

There are questions to do not only with the conventional model of higher education students, but also with part-time and mature students. I will not today open up the issue of payments through higher education institutions for qualifications of equivalent or lower quality, although that is a concern of mine—about which I have written to the Secretary of State—because of some of the impacts on some institutions and types of study.

There is also the whole area of comparison with further education. The Minister was not quite right when he said that nobody has ever helped in that area before, because career development loans have been available for many years. In a sense, they are a private sector risk—a managed and reduced risk. However, the scale of the commitment to CDLs pales in comparison with the size of the student loan book.

Part-timers at higher education institutions have, at last, been able to avail themselves of loans in certain circumstances, which is welcome, but some recent work has come to my attention through City and Guilds—the Minister might have seen it, too—confirming my long-standing belief that FE is left standing in terms of student support, however great its economic contribution might be. I hope that that will be addressed, and that the Minister will take those disparities seriously.

As I move on in my parliamentary career, I can reflect as well as—I hope—look forward. It is a strange fact that the Education Act 1962 marks the beginning of the concept of the student support package and the mandatory award. I was an undergraduate at that time. Since then, the whole body of measures has gathered barnacles, accretions, qualifications, embellishments, derogations and further advantages. Let me give a simple example: it was not until approximately 1990 that the first student loans were added to supplement the grants package, and Ministers have now brought back the grants package to supplement the loans. The concept of an entitlement, or mandatory award, attached to a first course of undergraduate study at a higher education institution has, however, persisted; but the time is fast approaching for us to take a fresh look not only at student finances, although that is important, but at the whole of the financing of post-compulsory education at higher and further education level and also embracing training and the important and growing area of continuing professional development. None of that is included in the Bill, as it is a technical, enabling Bill, which is all right as far as it goes—at least we hope that there is none of that, and that such changes to the system might only have crept in inadvertently. The issues we are discussing are serious and deep, however, and we will have to address and tackle them before too long.

I apologise to you and to the House for not being here at the beginning of the debate, Mr. Deputy Speaker.

The Bill had an inauspicious start as far as Wales was concerned when it was trailed in the draft legislative programme and described as “England only”. It has now been properly described as extending to England and Wales. Indeed, we have received more support and information from the Wales Office than we have had previously when dealing with similar Bills. The hon. Member for South Holland and The Deepings (Mr. Hayes) mentioned the Further Education and Training Act 2007, which led to confusion when the intention was not to give Welsh further education colleges the power to award foundation degrees. We are all gaining experience in this type of legislation.

For the record, there was no confusion on that issue, either when the Bill was going through the House or in respect of this Government.

I accept the Minister’s point. I merely say to him that Labour Members felt that there was some confusion, and they made contributions along those lines.

For the record, I remember distinctly that what my hon. Friends were concerned about was proper and effective scrutiny of the transfer of powers to the Welsh Assembly Government. The concern was not about whether that Government chose to take up foundation degree awarding powers.

I accept what the Minister says. I am looking to the future rather than to the past, and we want to learn lessons from the legislative processes that we have been through.

The explanatory notes give the student loan book a value of £18.1 billion. Lord Triesman’s office has informed my hon. Friend the Member for Ceredigion (Mark Williams) that that is an England-only figure and that the Wales figure is £1.1 billion. It would be helpful if the Minister confirmed those figures in Committee or at some other stage.

I would be interested to learn what representations the Minister and his Department have received from the Welsh Assembly. I understand that there is little appetite in Wales for using these powers. I might be wrong about that, but it would be interesting to hear about any representations that have been made to the Minister along those lines.

The powers are mirror powers—we are learning to use that technical term. They give Ministers in the Welsh Assembly Government the same powers, and no more, as the powers that could be exercised by Ministers here. My hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) asked where the money raised by the sale of the student loans book would go. When he was making that point, I wondered where any sum raised by the sale of the Wales student loan book would go if Ministers in the Welsh Assembly Government used the powers that are intended for them. Would the money stay with the Assembly or be taken back to Westminster? If the money stayed with the Assembly, what could the Assembly use it for? Ministers in the Welsh Assembly Government might be encouraged to use powers given to them if they felt that they could use the money in a constructive and positive manner.

In general, Liberal Democrats would prefer to have framework powers in this type of legislation rather than mirror powers. We shall be interested to see in Committee how the Minister will respond under scrutiny to such sentiments.

This is my first contribution from the Front Bench, and it is a great privilege to follow the many thoughtful speeches and interventions in the debate today. We have had a short but interesting debate, which has at times made me think that the major parties are conducting a love-in rather than a debate. It certainly lacked some of the usual rough and tumble of exchanges in this House, but why should the Opposition oppose the Government when they implement ideas that we originally proposed?

Much has been made recently of the Xerox Chancellor and the magpie Budget, but the sale of student loans goes back much further and could be described as Labour’s original sin. As my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes) said, my party first proposed the sale of student loans back in 1996, and it was implemented in 1998 and 1999 by the right hon. Member for Sheffield, Brightside (Mr. Blunkett) in an attempt to stay within Government spending limits.

If those on both sides of the House could continue to work effectively in pursuit of sensible policies, especially Conservative ones, it would be good for the image of Parliament and for the country. I therefore applaud the Government for once again recognising a bright idea that has emanated from the Conservatives. I hope that that sets a precedent for a future in which our policies regularly slip unchallenged past the House. Even the hon. Member for Brent, East (Sarah Teather), in a thoughtful contribution, made it clear that her party would not oppose the Bill.

The Bill is a sensible and rational piece of legislation, although I agree with my hon. Friend the Member for Daventry (Mr. Boswell), who pointed out that this is a Treasury Bill, not a higher education Bill. The sale of the student loan book is consistent with our belief in further public-private collaboration, and it will enable the Government to capitalise on a growing public asset without affecting borrowers or taxpayers. It could even have the added and totally irrelevant but enjoyable side benefit of irritating the left wing of the Labour party.

Speaking of the Labour left, I notice that an early-day motion from the usual suspects has already called for the uncosted abolition of interest on student loan repayments. It would be useful if the Minister could let us have an estimate of the cost of that policy. Perhaps he could tell us how many nurses or teachers would have to be sacked if the Government implemented the policies of their Back Benchers.

I welcome the hon. Gentleman to the Front Bench. To enable me to respond properly to the point that he has just made, I would be grateful if he repeated it, as I was inadvertently detained elsewhere for a moment.

The Minister may be aware of the early-day motion tabled by some Labour Back Benchers—I described them as the usual suspects—that calls for the abolition of interest on student loan repayments, which would raise costs for the Treasury significantly. I wondered whether he could advise us how much that would cost, perhaps in terms of how many nurses and teachers would need to be sacked. In any case, I advise him to keep an eye on the left wing of his party, so that it does not lurch too far to the left.

We are satisfied in general terms that the Bill includes sufficient safeguards for buyers and borrowers. The proposals will transfer a growing debt portfolio, and all the risks that go with it, out of public hands and into those of private institutions, which are vastly more experienced than Government in debt management. Those private institutions are also probably more experienced in data protection, given this week’s calamity—a point made powerfully by the hon. Member for Great Grimsby (Mr. Mitchell).

The National Union of Students has already stated its concern that the Bill may be a step towards students paying commercial rates of interest. I do not believe that it is, and it should be noted that students still enjoy a favourable interest rate that is pegged to inflation. There is little for students to worry about in the Bill, which probably explains why they have not been more vociferous in their representations to hon. Members. Students may be more concerned, however, that the average graduate debt is £15,000 and takes some 13 years to pay off, as the Minister recently informed me in a written answer.

Like the hon. Member for Brent, East, we recognise that financing a university education can be a challenge for many students and their families. We welcome the fact that the Bill enables the Government to preserve the low interest rate that students currently enjoy. In that context the point made by the hon. Member for Bury, North (Mr. Chaytor) is relevant in making sure that we are communicating directly with students on this matter.

The Minister, in his opening remarks, was right to say that it is prudent to consider the timing of any sale of the loan book. I understand that passing the legislation does not necessarily mean an immediate sale. As many hon. Members have said, in the light of the Northern Rock fiasco and the dark economic clouds over the banking sector and the economy, that is a particularly relevant and important concern.

There are questions on which I hope the Minister can shed some light. I understand that the proceeds from the sale are already accounted for in the comprehensive spending review. Perhaps he can tell the House whether there is a time limit on when the sale must be undertaken. If putting the revenue into the comprehensive spending review means that the money must be raised within three years, does that weaken our negotiating position in getting the best deal? My hon. Friend the Member for South Holland and The Deepings made a good point when he asked how much of the £6 billion is already accounted for in the comprehensive spending review and where it is allocated. If the Government do not raise the expected sum, what impact will that have on the Government’s spending plans?

I remind the Government that the student loan book is a public asset and taxpayers will expect a reasonable price from any sell-off. The Government must avoid the temptation to cash in too quickly for the sake of the public sector borrowing requirement and pressure to raise funds. It was absolutely right for my hon. Friend the Member for Daventry (Mr. Boswell) to remind the Minister that the former Chancellor of the Exchequer sold a large portion of the gold reserves for a quarter of the price that we could have got shortly afterwards, even if in doing so my hon. Friend slightly changed the flow of my hon. Friend the Member for South Holland and The Deepings. As the hon. Member for Twickenham (Dr. Cable) pointed out yesterday, the Government undervalued QinetiQ to the tune of £300 million.

I will be helpful to the Government, because they have had such a stinker of a week, and demonstrate why there is no rush to sell. Despite the concern expressed by the hon. Members for Great Grimsby and for Brent, East, this sale is a good deal for whichever commercial entity wins it. The House should note that these loans are not sub-prime mortgages. Graduates are likely to move directly into employment and begin repayment quickly. These loans are an attractive asset for banks, providing a continuous income over a long period from a low-risk group, collected securely through the tax system. They will also diversify the banks’ portfolios and give them direct contact with an important socio-economic group. The Government have a strong hand to play and we will watch to ensure that they play it well.

It is worth remembering that the first two sales of student loans failed to reach the estimated value. Valuations of £1.6 billion and £1.5 billion raised a combined total of just under £2.1 billion when sold. Does the Minister expect to lose as much as a third of the face value with this sale, as the Government have on previous occasions? Is that what he suggested in his opening remarks was good value for money?

According to the figure we have been given, the sale will involve £6 billion-worth of loans from the current £18 billion, but I am not clear whether that is the amount that the Government expect to receive into Treasury coffers or whether that figure is negotiable. I again remind the Government that these are public assets and Parliament expects full disclosure on how the sale will be handled and conducted. However, I am sure that we can deal with many of these questions in Committee rather than detain the House too long this afternoon.

I thank my hon. Friends who from a sedentary position keep me going and refuel me in mid-air.

We have also heard references to the expense of paying interest subsidies to the debt sale purchasers, particularly from the hon. Member for Great Grimsby. I accept that some form of subsidy will be inevitable to make the project commercially viable, but the expense of repayment should decline as the loans are repaid. Can the Minister inform the House what the impact of paying interest subsidies will be on the total revenue the Government will ultimately receive?

In a written answer to the hon. Member for Nottingham, South (Alan Simpson) of 3 May, the Minister informed us that between financial years 1998-99 and 2005-06 the interest subsidy came to a total of £561 million.

My hon. Friend might like to reflect on the fact that the nature of the interest subsidy is contingent. It cannot necessarily be predicted in advance because the rate of inflation, which drives the student loan formula, and the commercial interest rates available may diverge over time and could have no direct relation to one another.

As always, my hon. Friend makes an interesting point based on his wealth of experience in these matters.

Obviously, the Bill involves a much bigger transaction than the £561 million to which I was referring, and the amount of interest subsidy paid will increase at least proportionately, which involves some risk, as my hon. Friend suggests. Taking into account the face value of the sale and the subsequent interest subsidy payments, what proportion of the £6 billion will the Government ultimately keep? What proportion of it has been accounted for in the comprehensive spending review?

Can the Minister tell the House which loans will be selected for sale? Will the selection be random or systematic, according to a formula such as whether the loans are high or low risk? What is the total number of loans to be included in the package to bring the value up to £6 billion?

Many Members referred to trust in their contributions. Recent events have further undermined the Government’s reputation for competence—throughout Government, not just in the education sector. Several Members asked about data protection, about which the public have some doubts, so what assurances can the Minister and the Government give graduates that their personal details, including bank account information, will not be lost, leaked or liquidated accidentally? The public will not have been completely reassured by the Minister’s opening remarks. Can the House be assured that such information will always be encrypted and not moved around on CD-ROMs?

Can the public trust the Government to spend the proceeds of the sale wisely? There have been countless examples across Government, including in education, of profligate and wasteful spending. Indeed, some people might even say that unnecessarily splitting a Department and renaming the remnants constitutes just such waste. If that were not enough, there are many other examples of waste, as recent reports have shown; Lancaster university has already warned us about the frivolous way in which the Government splash the cash. A commitment from the Government to reinvest the revenue raised from the sale would be extremely welcome. In a powerful intervention, the hon. Member for Harrogate and Knaresborough (Mr. Willis) said that he wanted some of the money spent on higher education—as did some other contributors.

I, too, hope that at least some of the money can be spent on our higher education sector, which is, as the Minister knows, vital to the UK economy and should be given every reasonable support. However, the money resolution makes it clear that all the revenue will disappear into the Consolidated Fund. Can the Minister tell the House how much of it will go to higher education? A small part could be used to reinvest in institutions that will be devastated by the impact of recent cuts. Over the summer, the Government sneaked out a £100 million cut in funding to institutions dedicated to part-time and mature students. Help to institutions such as the Open university and Birkbeck college, both of which provide a valuable service to the UK economy, would be extremely welcome.

I am sure that, as my hon. Friend the Member for South Holland and The Deepings suggested, the House would be interested to know whether the Minister has been in discussion with interested commercial bodies already. Will it be possible in due course for the Minister to name the interested parties? If he feels that doing so would undermine negotiations, could he perhaps disclose the number of interested parties with whom he has already had preliminary discussions? If he genuinely fears undermining the negotiations, I shall not push that matter, as it is vital that the Government are not hampered in their efforts to obtain maximum value for money when the assets are sold.

It is important to respond to the powerful contribution from my hon. Friend the Member for Daventry (Mr. Boswell), who has enormous experience of these matters. In particular, he raised the issue of selling on loans, as did my hon. Friend the Member for Windsor (Adam Afriyie), and the Minister needs to offer considerable reassurance on that issue. My hon. Friend the Member for Windsor is right: it is possible that the Government could end up guaranteeing the very loan that they have just sold off.

Having sounded several notes of caution and having asked the Minister a number of specific questions, I shall close my speech by saying that the Opposition are, in general, satisfied that the Bill will provide the necessary safeguards to attract commercial buyers. The sale is evidence that closer co-operation between the public and private sectors provides the most effective way to manage the growing student debt portfolio. The revenue that the Bill will raise, and should continue to raise, is welcome. Despite reservations about selling on loans, information security and how the Government will spend the money, we believe that the proposals in the Bill are sensible, and we will therefore not hinder its progress on Second Reading.

I apologise. With the leave of the House, I seek permission to respond to the debate. Thank you, Mr. Deputy Speaker.

We have had a good, constructive and, in many ways, consensual debate. The hon. Member for South Holland and The Deepings (Mr. Hayes) set out his dedication, which I accept, and that of the Conservative party, to widening access to education, particularly higher education. Genuine commitment to widening participation requires consistency in decision making. I charitably remind him of the Conservative party’s flip-flopping on student fees. When tuition fees were first introduced in 1998, the Conservatives advocated full top-up fees, with no protection. By the time we took the legislation through the House before the last general election, the Conservatives were opposed to variable fees. Now, they are in favour of the Government’s position. Indeed, they now tell us that they want the review on the cap to be brought forward, which would be irresponsible. Some Conservative Members, such as the right hon. Member for Wokingham (Mr. Redwood), advocate the lifting of the cap before we have the evidence. The Conservative party is somewhat lacking in credibility on this issue.

I do not intend to challenge everything that the Minister is perhaps about to say, but it is important that Ministers start to collate the evidence on the review of the cap and to take a preliminary view—they should not leave that until the last moment, when they might take a snapshot, which would not be wholly representative of the profile of the situation. Further—I end on this point—they should also have regard to the long-term, whole-of-life implications for students whose other commitments grow as their careers mature.

I accept that last point, and given that the hon. Gentleman previously did my current ministerial job, I know that he is very knowledgeable on such matters. I certainly agree that it is critical that we have as much information as possible about how the new system is working before the independent commission in 2009. That is why the shadow Secretary of State for Innovation, Universities and Skills is neither right nor justified in calling for that commission to be introduced before we have the full, substantive body of evidence before us.

The hon. Member for South Holland and The Deepings chided me, saying that we were picking up Tory policies. We legislated on the sale of mortgage-style student loans in 1998—well before the commitment that the Opposition gave in their last general election manifesto. We believe that this is the right thing to do. It sensibly transfers risk from the public sector to the private sector and ensures that students and graduates are not affected in any way, shape or form.

The hon. Member for Harrogate and Knaresborough (Mr. Willis), who chairs the Innovation, Universities and Skills Committee, made an interesting contribution. He argued that the proceeds from the sale of student debt should be hypothecated to my Department. I will come back to that point later, but I have to say that the money will be paid into the Consolidated Fund and will support all Government expenditure. That is in line with the principle by which loans are repaid at the moment, and it would not be in anyone’s interest to breach the principle.

The hon. Gentleman speaks with integrity on these matters and I hear what he says about the money being paid into the Consolidated Fund. Members on both sides of the Chamber have expressed doubt about the timing of the sale. This would not be a great time to sell, as I am sure he realises. Given the Government’s financial problems, I suspect that the matter may be decided well above his pay grade. We do not want a sale to go ahead that is not in the interests of the public, universities or students.

The hon. Gentleman referred to the extra-sensory powers of the hon. Member for Daventry, who anticipated the next point that he was going to make. The hon. Member for South Holland and The Deepings is similarly endowed with those powers, because he has just made the very point that I was coming to.

We will not rush the sales imprudently. Clearly, it is not possible accurately to predict market conditions at a given point in the future because they will, naturally, vary for different sales. The powers in the Bill are intended to establish a long-term ongoing programme of sales. We will monitor the market with a view to launching sales at times when market conditions are more stable and less volatile, to help ensure the best possible value for money for the taxpayer. The Bill gives us the ability to sell. All that we have set out so far in the comprehensive spending review is our intention, over the coming three years, to sell £6 billion of student loans. If market conditions are not adequate or appropriate, and do not ensure value for money, sales will not go ahead. I can give that categorical commitment.

We heard welcome comments about establishing a cross-party consensus, if we can, so that everything possible is done to ensure confidence in the safety of personal data. I refer back to what I said in my opening contribution. My right hon. Friend the Chancellor made his statement this week. Lord Triesman, the Minister with responsibility for intellectual property and quality, has asked the Student Loans Company to review its operations and data management processes. No breaches of data protection protocols have occurred in respect of student loan administration and we are certain that no data have gone missing in respect of student loan administration. However, Her Majesty’s Revenue and Customs has initiated a wide-ranging review of its security processes and procedures, and we are undertaking a review of student loans and all Departments are reviewing their data management processes. If the hon. Gentleman wants to make further suggestions in Committee, I will be happy to consider them.

I am grateful for the tone of the Minister’s remarks. It seems that this is a dynamic situation. Fraudsters are becoming ever more sophisticated and it might be necessary to look at the matter more closely in Committee, given the events of the last few days. I am happy to accept his suggestion that we could do that on a bipartisan basis, but it might involve taking further advice and making amendments to the Bill to build in extra security—purely because it is important that we reassure the public, students and potential students.

It is important that I again make it clear that we have not identified a problem. No breaches of protocol have taken place and no student loans administration data have gone missing. Nevertheless, if the hon. Gentleman has proposals, I am happy to consider them.

The hon. Gentleman made a point about ensuring that a fair allocation of the Bill’s proceeds goes to my Department. That is a decision for the Treasury, and I will not reveal discussions that take place between my Secretary of State, colleagues in the Treasury, the Chancellor and me. I ask the hon. Gentleman to judge us by what we have done in the past. During the Conservatives’ last eight years in power, there was a 36 per cent. real-terms cut in per-student funding rate for higher education. Under this Government, there has been a 23 per cent. real-terms increase in the higher education budget. Across the country, virtually every vice-chancellor I speak to acknowledges that universities are undergoing a big expansion in their finances; that is in stark contrast to what they experienced before 1 May 1997.

The hon. Gentleman also asked me about growth projections for the student loan book. We expect that the income-contingent loan book will grow to about £21 billion by April 2008, and about £25 billion by April 2009. Clearly, the sales anticipated over the comprehensive spending review period are not for the whole loan book; we are talking about a long-term programme. I reiterate that if market conditions are not appropriate and we cannot guarantee value for money, sales will not go ahead.

Is it not also self-evident that the value obtained for a particular tranche of loans is a function of the size of that tranche? It may be quite easy—and sensible—to get small amounts away, and to leave some of the bigger bulk for later. In other words, it is not just a matter of initiating the programme. The Minister and the Government should not be in too much of a hurry to try to sell the bulk.

Let me again make it clear that we will act prudently and responsibly in undertaking the sales. The hon. Member for South Holland and The Deepings asked who was likely to purchase the loans. We believe, based on the advice that we have received, that a wide range of investors will be interested in buying bonds based on the loans, because they are a new asset class that will diversify investors’ portfolios and meet specific investor needs, for which there is a market. Those investors are likely to include pension funds, banks, insurance companies and fund managers; they will buy different loans according to their risk appetite.

The hon. Members for South Holland and The Deepings, and for Brecon and Radnorshire (Mr. Williams), asked about the implications for Wales and the Welsh Assembly. As the hon. Member for Brecon and Radnorshire knows, student support policy and ownership of the Welsh student loan book was devolved in 2006. As responsibility for student loans in Wales has been devolved to Welsh Ministers, it is important that the provision applies equally to Wales. Any decision on the future sales of the Welsh loan book must be made in Wales by Welsh Ministers. Clause 8 gives Welsh Ministers the power to make those decisions. Welsh Ministers are keen to ensure that the powers are in place, so that they can ensure that maximum value for money is achieved for Welsh student loans. The Bill will enable Welsh Ministers to decide when it is appropriate to use the powers, bearing in mind the relevant economic and value-for-money considerations.

The hon. Member for South Holland and The Deepings also asked whether I could give an indication of protected proceeds—that is, of the price that we will achieve. It would not be right to talk about the level of proceeds ahead of a rate. There will be a competitive process to maximise value for money for the taxpayer.

My hon. Friend the Member for Great Grimsby (Mr. Mitchell), who is no longer in the Chamber, made a number of points. He talked about £18 billion-worth of sales; our only commitment at this stage is to seek £6.3 billion over the coming three-year period.

The hon. Member for Brent, East (Sarah Teather), who leads for the Liberal Democrats, asked me to write into the Bill our future intentions with respect to fees and student finance. That would not be the right thing to do. We should stick to our policy of having an independent commission in 2009 and not prejudging it. That is the position of the Government, not of the Opposition. The right hon. Member for Wokingham has said that we should lift the cap now, and a Liberal Democrat think-tank says the same. We need to be responsible and stick to our policy.

The hon. Lady asked about the implications for the Student Loans Company. Let me be clear. Following a sale, the Government plan to include provision within the contract that the SLC will continue to carry out the administration and enforcement of the loans that have been sold, and will continue to have all direct day-to-day contact with borrowers. That should give significant reassurance.

The hon. Member for Daventry (Mr. Boswell) made an important contribution, based on his previous experience. We will not sell at any price. He made some important comments about students who travel overseas or students from elsewhere in the European Union. We need to be clear that loans to EU citizens for tuition fees started only in 2006-07. The first graduates will begin repayment from 2010. For that reason, those loans will not be part of the early sales of the loan portfolio.

We are putting in place with the Student Loan Company a comprehensive system for collecting loans. The principle of income-contingent loans means that we will collect repayments according to purchasing power in the country where the borrower is resident. That is important. No one will be able to avoid repaying because a good local salary does not meet our £15,000 threshold simply as a result of the currency rates. We will ensure that enforcement across the EU will be possible under EU law by taking action in the UK courts—from memory, I think EC directive 1441 deals with that.

The hon. Member for Reading, East (Mr. Wilson) wound up for the Opposition. I welcome him formally on his first appearance at the Dispatch Box. He asked me about paying interest subsidies to the purchaser. That is not how we expect the sale to work. There will not be an ongoing subsidy to purchasers; all that will be taken into account in the sale price.

The hon. Gentleman commented on second degrees. Let me state for the record that we are not cutting funding to universities. We are saying—rightly, in my view— that £100 million over three years ought to be transferred from institutions spending that money on people who already have an undergraduate qualification to those, especially in the workplace, who do not have a first degree. There will be protection and transition. No university will lose out in cash terms at the end of that period. That is the right priority. Some 70 per cent. of the adult work force do not have a first degree qualification. That is a higher priority than people who already have their first degree.

In conclusion, the Bill is important. We have had a sensible and measured debate and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

SALE OF STUDENT LOANS BILL (PROGRAMME)

Motion made, and Question put forthwith, pursuant to Standing Order No. 83A(7) (Programme motions),

That the following provisions shall apply to the Sale of Student Loans Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on 11th December 2007.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—[Mr. David.]

Question agreed to.

SALE OF STUDENT LOANS BILL [MONEY]

Queen’s recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Standing Order No. 52(1)(a) (Money resolutions and ways and means resolutions in connection with bills),

That, for the purposes of any Act resulting from the Sale of Student Loans Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of any expenditure of a Minister of the Crown in consequence of the Act, and

(2) the payment of sums into the Consolidated Fund.—[Mr. David.]

Question agreed to.

DELEGATED LEGISLATION

With the leave of the House, I shall put together the remaining two motions.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

Constitutional Law

That the draft Criminal Proceedings etc. (Reform) (Scotland) Act 2007 (Powers of District and JP Courts) Order 2007, which was laid before this House on 8th October, in the last Session of Parliament, be approved.

Companies

That the Company and Business Names (Amendment) (No. 2) Regulations 2007 (S.I., 2007, No. 3152) dated 5th November 2007, a copy of which was laid before this House on 6th November, be approved.—[Mr. David.]

Question agreed to.