Clause 3
Sale of Student Loans Bill
4:45 pm
John Hayes (Shadow Minister, Innovation, Universities and Skills; South Holland and The Deepings, Conservative)
Yes, throughout this part of the Bill there is a need to strengthen the kind of reassurance that my hon. Friend draws our attention to—I suppose linguistically that that should have been “to which she draws our attention”; one does not like to end sentences with prepositions.
My point is about the intent of the Secretary of State. It is about whether we are being slightly too permissive in the way in which we address those issues of assurance, security and certainty, which are necessary if graduates are to feel that their circumstances have, as Minister assured us, remained unchanged by the transfer. Therefore, with respect to clause 3, I wonder about both my own suggestion and that of my hon. Friend.
I think that I would go further. If one looks at line 23, it might be useful for the Government to prohibit transfers to an organisation, body or individual outside the jurisdiction of the United Kingdom. The Minister will have to tell me whether that is legally possible. I have a slight worry that if we are passing into law an arrangement that gives the Secretary of State certain powers to affect ongoing sales, and if that happens to contradict the commercial reality of an ongoing sale to another country, a multinational company, or a body that is outside our jurisdiction, would that have much weight in terms of both the public interest and, more especially, the interests of graduates? I wonder whether we should be less permissive in respect of ongoing sales and whether we should say something about risk, or perhaps about a prohibition on the sale to multiple purchasers, although that is a matter for the Minister to comment on.
I take the point made by the hon. Member for Brent, East that such a move is unlikely, given the assurances that we have had. In respect of ensuring the kind of certainty and security that we all want, the worst case scenario would be for many people to purchase parts of this book all over the globe and for us to feel that we have lost control about what then happens. I guess that the Minister will assure us that that is fanciful and that every step will be taken to ensure that that does not happen. However, there is no mention of the word “prohibit” in the Bill. We have a lot of mays, expectations and hopes, and a fair amount of good will, but we do not really prevent any of those concerns in the Bill. I wonder whether we should be slightly more restrictive about how we deal with this. I raise the points for the sake of proper scrutiny and discussion, but there are legitimate fears about resale in that regard.
Clause 3 specifically gives the purchaser the right to sell the loans to another buyer after the initial sale and, subject to any limits on that right, specifies the powers of the Secretary of State in that regard. Therefore, we are accepting that the resale might take place and that we need to be cautious about that, otherwise we would not have included anything in the Bill about the Secretary of State’s capacity to intervene.
The necessary safeguards are of critical importance, given that history has taught us that loans can be repackaged and can involve a large number of different players, some of whom could be outside the jurisdiction of the Secretary of State. It is appropriate to say another word about the security of data. We do not want to dwell on the Government’s misfortunes because that would be both unkind and unheroic. It is important to point out that the greater the number of people involved in this, and the further the chain moves from its place of origin, the more those doubts will loom large. I think that the safeguards are critical. I am grateful for what the Minister has said both on Second Reading and again today, but this is critically important to clause 3.
On Second Reading, on this very subject, my hon. Friend the Member for Daventry made such a point when he described the hypothetical example of a Lithuanian bank securing a package of loans. Under the current proposals, it seems entirely possible that a foreign bank could purchase part or all of this package, and that would create all kinds of issues regarding their relationship with both the debt and their own local policy, in as much as it contradicted our approach. I have nothing against Lithuania, by the way, and I am sure that my hon. Friend the Member for Daventry has not either.
I also wonder whether we might think about the position of EU students. Again, we had some discussion about that this morning. There is a question of how this will change over time. The Minister accepts—he predicted it—that this is a growing issue. The changes to the entitlement of EU citizens are only just beginning to take effect. Indeed, they will take effect during the course of the sale of this product. Given that we might not sell the book in part or whole for some time—perhaps some years—by the time that it is sold, this will be a matter of even greater significance. We could well be dealing with a larger number of people who are not living in the United Kingdom. There are questions about both the management of this process and the collection of debt. This seems to be the aspect of the Bill on which Minister might want to reaffirm one or two points.
It is important to establish how far the Secretary of State is likely to intervene in any commercial issues associated with the sale. I am sorry to return to this, but it is relevant to the clause—I made the point on clause 1. I am still not clear whether the Secretary of State would intervene if he felt that certain commercial arrangements were not in the interests of the graduate community or the nation. Would he intervene in such circumstances? It says in the clause that he might, or may, but we are not really clear about whether he would. Quite how would he intervene, given that this sale might take place some way down the line? It might not happen in the first six months or the first year. Indeed, we might be talking about events that take place a good time after the original transaction.
I hope that with those points on the clause we have once again highlighted some of our concerns about resale and the way in which the Bill is framed in that respect. I press the Minister once again to look more closely at this to see whether these words might be strengthened so that no one can be in any doubt that the Secretary of State would have not only the power, but the duty, to intervene if the circumstances of resale were unacceptable or inappropriate.