Student Loans Company Building (Government Liability)

– in the House of Commons at 3:31 pm on 28th November 1989.

Alert me about debates like this

Photo of Jack Straw Jack Straw Shadow Secretary of State for Education 3:31 pm, 28th November 1989

On a point of order, Mr. Speaker. I have given you notice that I wish to raise the question of parliamentary approval for the costs of the Student Loans Company building in Glasgow. Last Wednesday, the Secretary of State for Education and Science presented to Parliament a minute giving details of what was described as a contingent liability or guarantee on the rent of the building. The rent for one year is about £1 million and other costs, too, are guaranteed. There is no statutory authority for this expenditure. It has never been authorised by the House.

"Erskine May" makes it clear that the procedure for presenting a minute to Parliament concerning contingent liabilities arises only in respect of liabilities that are genuinely contingent. "Erksine May" makes it clear that, where an objection is laid, approval should be withheld for 14 days pending consideration of that objection. The Opposition have laid such an objection, which stands as motion No. 42 in the Remaining Orders of the Day.

Three important questions arise from the use of the procedure by the Secretary of State for Education and Science. First, the liability that he has identified is not contingent, as the procedure requires, but is an absolute liability. The procedure arose from the 1977 report of the Public Accounts Committee, which made it clear that there should be a procedure for registering liabilities that were genuinely contingent and unquantifiable. An example given was the previous Conservative Administration's nationalisation of Rolls-Royce.

At that stage, the Government's liabilities were genuinely conditional and unquantifiable, whereas the liability of the Exchequer for the costs of the Student Loans Company Ltd. building in Glasgow are absolute. The Government have said that they will pay all the costs of administration. No contingency arises. We are dealing not with a contingency but with expenditure. In those circumstances, how can the procedure conceivably be used to override proper parliamentary scrutiny of the substantial decision that lies behind it?

The second question is—

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

Yes, but make it brief please, because there is an important debate before us.

Photo of Jack Straw Jack Straw Shadow Secretary of State for Education

There are two further questions, Mr. Speaker, and I have given you notice of both of them.

Is it right for the procedure to be used when there is a Bill on the same issue before Parliament—in other words, to be used to by-pass parliamentary scrutiny?

My third question is: now an objection has been made, in the terms of my right hon. Friend's motion, how can Parliament hold the Secretary of State to account for what would otherwise be an arbitrary exercise in power without statutory authority?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I am grateful to the hon. Member for having given me notice of this point of order, as that has enabled me to give careful consideration to the matters that he has raised.

In answer to the hon. Gentleman's first point, I am satisfied that the proposed guarantee is properly described as a contingent liability. The direct obligation is being incurred by the Student Loans Company Ltd., but there is a guarantee and that is why the need for a specific departmental minute has arisen.

The hon. Member's second point was that the matter would best be dealt with by including it in the Education (Student Loans) Bill. I am sure that he will recognise that that is not a matter for me, but something he should argue during the proceedings of the Bill.

The hon. Member's third point was to ask what happens next. The procedure was introduced in 1977 in response to a recommendation from the Public Accounts Committee. Its purpose was to draw specific attention to new guarantees, and to provide a breathing space during which objections to what the Government propose can be made direct to Ministers. Thereafter, the Government bear responsibility for what they decide and are answerable to this House in all the usual ways. There is no automatic follow-up procedure, but what has been done is fully in conformity with the practice in force since 1977.

Photo of Jack Straw Jack Straw Shadow Secretary of State for Education

I am grateful to you for that answer, Mr. Speaker. Am I to understand from that that the "consideration" specified by "Erskine May" is a consideration made not by the House but by the Minister?—in other words, despite the motion from my right hon. Friend, that the Minister is to act as judge and jury in his own cause?

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

The house will have to judge that in debate. I have carefully looked into the question the hon. Gentleman has raised. It is wholly in conformity with a long-standing practice, and resulted from a report by the PAC.