Clause 3

Sale of Student Loans Bill – in a Public Bill Committee at 4:45 pm on 4 December 2007.

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Onward Sales

Question proposed, That the clause stand part of the Bill.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

We are flying through the Bill, and I would like to slow things down a little by encouraging a thorough examination of clause 3. Clause 3 is a fundamentally important part of the Bill with regard to resale, which was mentioned this morning and this afternoon as an area of concern. I wish to draw attention to a way in which the Bill might usefully be amended, and perhaps the Government might consider it before Report or elsewhere during the Bill’s passage. This morning we focused on subsection (6) of clause 3—on onward sales—and particularly on line 16 and the phrase “Transfer arrangements may”, which is followed by a series of steps that the Secretary of State can take to limit the circumstances in which transfer might take place. I am not sure why it says “may” and  not “will”. The point was dealt with earlier to some degree, but I do not feel that we have had a satisfactory answer.

I have no doubt that the Government are determined to ensure appropriate protection. However, it is unhelpful to leave doubts in the Bill about whether or not the Secretary of State will use those powers. It is useful for the powers to be stated in the legislation, but I want at least to probe why “may” has been used, rather than “will”.

Photo of Angela Watkinson Angela Watkinson Opposition Whip (Commons)

The Bill provides for transfer arrangements to be made without the knowledge or consent of borrowers. That is standard practice in these matters. Does my hon. Friend feel that something should be included in the Bill that provides a duty to inform borrowers about the new company to which they are indebted? Although they deal directly with the Student Loans Company, borrowers should still have information on the company that is holding their debt if it is different from the original company.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

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.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State 5:00, 4 December 2007

I want to pick up on the points that the hon. Gentleman has just made and also our discussion this morning. I was a bit baffled by the reply that changing “may” in subsection (6) to “shall” would completely change the way in which the sale would be recorded on the Government order books. I do not understand that, so will the Minister explain it? Using the word “may” seems to make it perfectly clear that the Government intend to use this power. I cannot see how changing the word to “shall” alters that.

A further answer that was given this morning suggested that the reason that the power was permissive was because circumstances could change and the Government may or may not wish to use that power. Surely if the power is there, it will be written clearly into the Government’s contract with whoever buys the debt. If it is not written into the contract, I cannot see how it can be changed retrospectively, if we suddenly find that circumstances have changed and the Government really want to use it. It would be helpful if the Minister could explain that.

Another question that I asked this morning that was not really answered was about what circumstances would be required for the Government to use any of these powers. I accept that the Minister might wish to use the three powers separately, but could he outline some of the likely circumstances that would trigger the use of the Secretary of State’s powers?

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

Following on from the comments of the hon. Member for Brent, East, I understood what the Minister said this morning about the use of the words “may” and “shall”, and whether or not this is on the public accounts. The situation seems strange, but that is the advice that has been given by the experts. The hon. Lady’s point was that if there was no prohibition in the original sale, could a prohibition be retrospectively inserted into the original sale document?

If there was no prohibition in the original sale, company A, having bought from the Government, can sell to company B so that it owns the loan book. Can the Secretary of State insert a prohibition for the future into the arrangements with company B, or is it the case that once the Government have decided, as they might, not to insert that prohibition in the original sale to company A, they cannot insert it later, even if the loan  book is sold on down the line to various financial institutions that are perceived by the Government to be dodgier and dodgier?

Does the Secretary of State intend to insert into the transfer arrangements any prior notification clause so that company A, if it considers selling the loan book to company B, must first notify the Secretary of State to give him the opportunity to consider whether to insert a prohibition at that point? Otherwise, if no such protection is built in, company A could buy the loan book and subsequently sell it on to company B, potentially without the Government even knowing. If the Government took a different view of the suitability of company B, they would have missed the opportunity to review whether the arrangements needed to be amended.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

That was precisely the point that I was trying to make when I spoke, rather inelegantly, about a chain. Given that the process that the hon. Gentleman has described might take place over many months or years, it is entirely possible that the Government might be unaware. The Bill suggests that the Secretary of State may include provision to make himself automatically a party to any onward sales contracts, but, frankly, if that were to involve a multiplicity of bodies over a considerable period of time, there would be real doubts as to whether he would have that capacity, purely because he would be ignorant of the facts.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I agree with the hon. Gentleman. I am probing the Government on whether there would be some kind of notification clause, if I can put it like that. With the greatest respect to my hon. Friend the Minister, for whom I have the greatest regard, this is arguably a Treasury Bill, and this is probably the ninth such Committee on which I have sat. People who deal with the Treasury are seared by the experience of Mapeley—that name might mean something to my hon. Friend.

Mapeley bought Government buildings and sold back the lease. Unfortunately, the then Paymaster General was, to put it charitably, not fully informed by her officials as to the identity of Mapeley. There were two Mapeleys. One was called something like Mapeley Holdings UK Ltd and the other was called something like Mapeley Holdings, Bermuda Ltd. Hon. Members can guess which company ended up owning that estate and not paying tax in the UK, which was rather ironic given that the buildings had formerly been owned by Her Majesty’s Revenue and Customs and had been leased back to it. I wonder whether my hon. Friend the Minister can assure me that there will not be any transfer to an offshore financial company that will not be subject to tax in the United Kingdom.

Will thought be given to putting prohibitions in the sale agreement in respect of a further transfer from an onshore company, or company A in my example, to an offshore company—company B—because otherwise the Government will be losing out on tax revenues? If the loan book ended up in the hands of an offshore company—for example, “SLC (Bermuda) Holdings Ltd”—that might ex post facto affect greatly all the value for money calculations that had been made before the process was put in train. One part of the value for money calculations would be the potential corporation  tax payments from the purchasing company, as a trading organisation, back to the Government. However, if that trading company, or an ultimate purchaser down the line, were not UK-registered and not paying UK tax, it would somewhat change the equation.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

Let me set this out in as up front a way as I can. I hope that I can reassure members of the Committee. It is pertinent to ask how the Government will be sure that an ongoing sale on the part of a special purpose vehicle has taken place, despite the fact that for 10 years we have been operating a special purpose vehicle in respect of mortgage-style student loans and there has been no onward sale. There is no question of the Government being unaware because we will have used, in the initial contract, one or other of the powers under clause 3(6) to ensure legally that we are a party to the onward sales contract. We would expect a notification clause to be part of the contract, and we would ensure that there was. I hope, on that basis, that members of the Committee are reassured.

As for the question asked by the hon. Member for Brent, East, I am not sure, according to the rules of the House, whether I am allowed to acknowledge that I have debated it with my officials. I am sure that Hansard will correct me if I was not supposed to have done so. Were we to say “shall” instead of “may” in clause 3, that would be contrary to the current accounting rules in that the proceeds would not count as a sale and thus release resources to reinvest.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State

Is the Minister willing to publish that advice to the Committee so that we can understand its basis?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I am more than happy to do so. The reason for the proposal, as a possible tool in our tool box, is that the rules governing the classification of Government debt change from time to time. As I said this morning, the rules are different in respect of the mortgage-style student loans, which is why the sale under discussion will be undertaken on a different basis from the basis of the original loans. I will happily write and confirm that.

As for the question asked by the hon. Member for South Holland and The Deepings, we have made matters clear. Our views will be reported in Hansard. As with any commercial sale of debt, it is not normal practice to write to the borrower in advance. However, as soon as a sale has taken place, the Student Loans Company will write to the individual graduates who are affected.

As for sales to bodies outside the United Kingdom, to which the hon. Gentleman referred, there is a track record. Thinking back to asset sales undertaken under the Conservative Government, I do not recall them saying that there ought to be prohibition on the sales of gas and water. The key protections are that borrowers should be protected, that we have sufficient mechanisms in place to give us control, and that loans remain governed by English law.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships) 5:15, 4 December 2007

There are two issues. One is the protection of those graduates involved, which is critical in respect of multiple sales and sales that take place outside UK jurisdiction. Indeed, we would not have to build so many caveats into the Bill if that was not a problem; we  are giving the Secretary of State additional powers partly to ensure that very protection. The other of my concerns, the effect on the public interest in respect of offshore companies, was raised by the hon. Member for Wolverhampton, South-West. I use the term “outside UK jurisdiction” broadly, but it might include the sort of concerns that he raised. I speak not only about the protection of the graduates concerned but about the public interest. Multiple purchasers in foreign countries and a range of offshore companies—is that the future we want to see for the student loan book?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

If we look at the track record, that is not the scenario that we are projecting. It is my understanding that through paragraphs (a), (b) and (c) to clause 3(6), which put a number of tools at our disposal, the Secretary of State will be able to make judgments about the onward sale in order to protect the graduate. That is of fundamental importance. It is clear—for the record—that we have those protections in place.

The hon. Gentleman also raised some questions about data—an issue that was the subject of some debate in Committee this morning. He argued that the greater the number of people involved, the greater the potential for risk. It is important to state, as I did this morning, that for practical purposes personal data will remain with the Student Loans Company, which will act as agents of the purchaser. The bonds will be tradeable in the market, but loans will remain with the special purpose vehicle, which is most unlikely to be sold.

The criminal penalties in respect of the untoward and illegal onward passing of data are significantly increased under the Bill, with a maximum prison sentence of two years. We have a very robust framework.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

There are two circumstances in which data may need to be made available. The first is in order to tempt a prospective buyer. That would not mean that the data did not need to be anonymised, but enough information would need to be made available to potential purchasers to ensure them of the character of the risk and the value of the product. The second circumstance, which was alluded to this morning, is for audit purposes. Will the Minister explain both circumstances in more detail, so that the Committee can give them full and proper consideration?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I am happy to try to do that. Before a sale takes place, a potential purchaser needs to understand the type of debt being purchased. For example—I think that I used these words this morning—an indication would be given of the graduate income level, age and other such factors, but it would be given on an anonymised basis so that it could not be traced back to individuals. That is an important protection. There would also be a need for information, after sale, for audit purposes. To some extent, audits are undertaken on a sample basis, so a sample of individual personal details would need to be transferred to the special purpose vehicle. However and as I said this morning, that would be undertaken in respect of the existing mortgage-style student loans. That data transfer is undertaken by a protected, encrypted channel, and that would be our intention for the income-contingent loans.

Finally, the hon. Gentleman raised points about other European Union students. I made the point this morning that European Union students have been able to access loans for fees only since 2006, so we are not yet into the repayment phase. There is EC directive 2001, which, crucially, enables us to take action in the UK courts to chase a debt that is in default, and then to have that ruling enforced within the court of the country in which that individual resides.

I believe that that will give us a robust protection over time. We want certainty that, even if a European Union student comes from a country where the cost of living and average income are less than in this country—so that they are probably unlikely to end up earning more than £15,000 a year—the banding system for thresholds will reasonably ensure that people repay, wherever they reside after graduation.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

This is an important issue, and the reason is that we may not be selling the loan book in the short term. We have all been clear that this may take place over many years, according to market conditions. Given the likely change in the character of the student population, and the changes that the hon. Gentleman has detailed, it would be interesting to know whether he and his Department have done any modelling on the nature of the student population, and the consequent nature of debt. He has indicated that they have, because he started to talk about the circumstances in some of the countries of the EU and their ability to repay loans. That modelling would be critically important to the sales, would it not? If I were a potential purchaser, for example in 2009 or 2010, I would want to be looking at the proportion of people who had taken these loans who live in different parts of the EU. By the way, Miss Begg, when I mention the EU, I expect a thunderclap and a streak of lightning, but we will leave that to one side. I would want to conduct that examination so that I had a reasonable chance of accurately assessing repayment profiles. Is that reasonable? Is that modelling taking place, or has it taken place? If not, should it take place?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

Well, modelling can, but the repayment track record is not known, because the loans for fees for European Union students started only in 2006. There is, however, a certain amount of good track record for UK citizens who live abroad or who emigrate to other countries—where such records exist and where there are robust repayment systems. With the legal processes that are now in place, which have been achieved only by co-operation with our European partners on repayment mechanisms, I am confident that we can ensure that wherever students reside their loans will be repaid.

Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I am not sure that my hon. Friend the Minister had the opportunity to answer my question on prior notification by company A of a proposed sale to company B, and I wonder whether he could deal with that. Let me mention another issue, however. I might have misunderstood what he said. My understanding is that what he said this morning about the word “shall” in clause 3(6) was slightly different from what he said this afternoon. I am in no way suggesting that he is ducking and diving, but I want to be clear.

My understanding this morning was that if the word “shall” replaced the word “may” in clause 3(6), that would mean that the loans would stay on the public account. I understood my hon. Friend as saying that, were we to leave the word “may” in the Bill, and the Secretary of State then inserted a prohibition in the sale agreement under that permissive power, the loans would not go off the public account. If we get the wording one way—“shall”—it means they will not go off the public account; on the other hand, if we leave “may” in the Bill, and the Secretary of State then inserts a prohibition, they also will not go off the public account. If it be the latter case, that would tend to militate against the Secretary of State using the permissive power to insert the prohibition. I would like some idea as to which of those two scenarios might be the case.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I am genuinely not trying to duck and dive. It is not my style to do so. My clear understanding is that, were we to insist upon the use of clause 3(6)(a), that would lead to a reclassification of the debt, and we would not be able to transfer the debt from the public to the private sector. However, the rules on classification may change, which is why, at this stage, we feel it prudent to keep that provision in. We would not want to have to come back and legislate were the rules to change.

Rob Marris indicated assent.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I can see by the nods that I am getting that I have answered my hon. Friend’s question. Even if we were not able to use that provision because the rules of classification had not changed, we have other tools at our disposal to protect the graduate’s interest.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State

That exchange was extremely helpful, but I am still concerned about the point made by the hon. Member for Wolverhampton, South-West. It remains the case that the Government are very unlikely to use this power until such a time as their accounting rules change. That is my understanding of the exchange. Will the Minister clarify that point, and will he tell us whether he has any kind of powers that can prevent the onward sale of the SPV if the Government do not like it?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

That is but one tool at our disposal. If we look at the others that are available, we see that we are able to—this is in clause 3(6)(b)—

“require further transfer arrangements to be effected by way of novation or other arrangements to which the Secretary of State is a party”.

I believe that gives the protection that hon. Members are looking for, and I hope that we can agree that the clause should stand part.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

I do not quite understand the difference, in that case, between subsection (3) and subsection (6). If the hon. Gentleman is saying in response to the point made by the hon. Member for Brent, East—perhaps he wants to revisit this; I think he said subsection 6 but he may have said subsection 3—

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

Yes. That is what I thought he said. I do not quite understand the hon. Gentleman’s point, because if he is saying that the Government do have the power to effect these further commercial changes—this resale—I do not understand why the clause should not say “shall”. Either the Government have these powers, or they do not. Either they intend to use them, or they do not. Either they intend to use them by this means, or by some other prohibition. I am not absolutely clear about this, and I am getting less clear as time goes on.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I am not responsible for drawing up the rules on the classification of Government debt, although clearly I support them. They are there for good reasons. My clear understanding is that were we to insert the word “shall” in clause 3(6)(a), that would make us unable to classify the debt as a transfer from the public to the private sector. However, there are other protections available to us in clause 3(6)(b) and (c) to enable us, through the contract, to protect the interests of the graduate.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State 5:30, 4 December 2007

Perhaps the Minister could explain what “by way of novation” means so that we understand exactly what would occur. Reading paragraph (c), it is not clear how it differs from paragraph (a), except by virtue of being a different way of explaining it.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

We can bat this backwards and forwards. All I can say, clearly and precisely, is that the advice I have, based on the accounting rules, is that the mechanisms available to us in clause 3(6)(b) and (c) enable us to protect the graduate interest. Were we to insert the word “shall” in respect of paragraph (a) so that in all circumstances we would have to prohibit the making of further transfer arrangements without the consent of the Secretary of State, it would contravene the rules of classification and it could not be classified as a transfer from public to private sector debt.

Photo of Sarah Teather Sarah Teather Shadow Secretary of State

I am genuinely seeking clarification. I am not trying to prolong the Committee. I understand the Minister’s point about inserting the word “shall”, but that is not the discussion that we had a few moments ago, which was that if he enacted paragraph (a), it would affect the way in which the loans were recorded on the balance sheet. I thought that we had come to a point where we understood that the Government are very unlikely to use the powers under paragraph (a) until the Government accounting rules are changed. Therefore, for the Committee’s purposes, paragraphs (b) and (c) are essential in terms of the protection that is enabled. I am trying to get the Minister to clarify what those protections really mean.

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

My apologies. Perhaps it would help if I set this matter out in writing. We will certainly have at our disposal the protections afforded by clause 3(6)(b) and (c), which will enable the Secretary of State to insert into a contract, for example, the stipulations that we expect the Student Loans Company to continue to administer the loans on behalf of the private purchaser and that the graduate will continue to have access to the independent assessor. Those are two examples, but I will happily set out for the hon. Lady in writing the kind of examples that those paragraphs will give us.

Photo of John Hayes John Hayes Shadow Minister (14-19 Reform and Apprenticeships)

Perhaps I might make a suggestion to the Minister because it seems to me that we are in a bit of a pickle. My understanding is beginning to emerge from the murky darkness into a clear light. It seems that the Minister is telling us that paragraphs (b) and (c) are sufficient, in his judgment, to offer the kind of protection that hon. Members in the Committee—and I am sure in the whole House—would seek. In that case, the questions are begged: why are paragraphs (b) and (c) grouped with paragraph (a), and why can they not be prefixed with the word “shall”? Why are those paragraphs all part of the same provision?

I agree with the hon. Lady that the likelihood of using paragraph (a), given the current rule, is small. That is why “may” is there, but I am not sure that that is a convincing prefix for paragraphs (b) and (c). I want to revisit this issue on Report because it is clear that the eagle eyes of hon. Members on both sides of the Committee have focused on it. We all spotted this “may” and “shall” issue and thus we all spotted what seems to be a potential weakness.

The Minister has gone some way to reassuring us that there is strength at least in paragraphs (b) and (c). During the passage of the Bill, will he consider looking at the drafting of this subsection again to assist those of us who have been in the darkness and come into the light in bringing others to the light with us?

Photo of Bill Rammell Bill Rammell Minister of State (Lifelong Learning, Further and Higher Education), Department for Innovation, Universities and Skills

I am always happy to consider constructive proposals. Having looked at the matter in detail, I do not believe that we need to amend the legislation at this stage. If amendments are tabled on Report to the effect that has been set out, I will consider them. However, I state for the record that under clause 3(6)(a), (b) and (c) we have the protection that members of the Committee are looking for. I hope that on that basis we can agree that the clause should stand part of the Bill.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.