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I turn to the general question of value for money. As Conservative Members have said, this is not a terribly good time for the Government to sell off part of their underlying assets. The Government may well be so desperate to make a sale at the moment that they are seeking to put terms into the Bill that are drafted to be in the interests of potential purchasers. To meet their obligations under the comprehensive spending review, the Government need to raise the proceeds that have already been referred to. In this financial year of the three-year CSR, I understand that the Government have a target to raise £3.4 billion, before the end of March 2009. Will the Minister confirm that? They aim to raise £6 billion overall in the three-year CSR period. Government finances are in a parlous state so will the Government be pressurised into selling this asset, which currently belongs to the taxpayer, to meet short-term financial embarrassments, rather than to make long-term investments in higher education? Such investments would be a much better use of the proceeds that will be realised once the student loan book is partially sold.
I shall not dwell for too long on amendments Nos. 11 to 14; the hon. Member for South Holland and The Deepings (Mr. Hayes) has already diligently read out the guidance notes on the Bill. However, I share his concern that we should make sure that proper data protection procedures are in place so that the data that belong to individuals are not in any way compromised and are held only by those with a direct interest in the individual and their ability to make repayments, and not by any prospective purchasers or any people associated with them.
Bill Rammell: This group of amendments deals with the process by which the Government may give undertakings concerning amendments to regulations, with how the Government will report on each sale and with how information about borrowers will be handled. Let me start by being explicit about the value-for-money framework. Throughout the proceedings on the Bill, we have made it clear that the sales would not take place unless we could demonstrate value for money. The Government have published forecasts of anticipated receipts of some £6.3 billion from the proposed sales programme over the comprehensive spending review period. However, the key point is that the amounts are forecasts rather than commitments. The Government are committed to the student loans sale programme, but only if any sale represents good value for money. That should be a significant reassurance.
I turn specifically to amendments Nos. 2, 3 and 15, which are about undertakings. They respond to expert advice that we have received from our sales arranger, Deutsche bank, which was engaged after Report and Third Reading in the House. For us to achieve good value for money on behalf of the taxpayer, potential purchasers must understand what is being sold. Financial institutions can model the economic and credit risks that we wish to transfer away from the Government, but not the political risk of Ministers using their powers to change the conditions of repaymentand, consequently, predicted cash flows to the purchaser. If potential purchasers believed that the Government might alter an asset in an unpredictable way after selling it, that would seriously reduce what those purchasers would be prepared to pay.
The Bill already provides the option of offering compensation if future policy changes compromise the value of the transferred asset. However, we have been advised that the Government might achieve better value for money if they could give undertakings about how regulations governing student loans may or may not change terms and conditions in future. The impact that a compensation mechanism may have on the size and timing of future cash flows may contain too much uncertainty for investors. Having the power to give undertakings also gives flexibility to cater for possible changes in the classification rules, which are currently being redrafted by EUROSTAT.
Mr. Hayes: The Minister has been clear about the reasons. If a Minister acted in the way that he describes, terms could be fixed on the part of the loan book that was being sold, but not on the part that was not being sold. That would mean that borrowers in the same circumstances, borrowing the same amount for the same reason, had very different arrangements. Is the Minister uncomfortable about that?
Bill Rammell: As I have made clear throughout the proceedings on the Bill, we expect the terms and conditions to be the same regardless of whether the student loan has been sold. The impact on the borrower should be exactly the same.
I was referring to the EUROSTAT redrafting process. Changes in the rules, which occur from time to time, can have a material impact on the ability to offer compensation. It would be unwise to have only one means of addressing the issue that might, under rules updated after the current redrafting or a future alteration, prevent a true sale. That would negate part of the purpose of transferring the loans from the public to the private sector. I can give the response that the hon. Member for South Holland and The Deepings (Mr. Hayes) asked for in respect of the comments of my noble Friend Baroness Morgan. She made it clear in the other place that the amendment that gives powers to make undertakings aims to ensure that a sale can yield good value for money and that a true sale can release resources for use on Government priorities. It provides an option for the Government to use in realising both those aims.
Mr. Hayes: I think that the Minister may have misunderstood my first intervention; perhaps I did not make it clearly enough. If the terms were fixed for the tranche of the loan book that was being sold, which is precisely what the amendment gives the Government power to do, it is entirely possible that borrowers whose loans had been sold would have fixed term loan rates whereas borrowers whose loans had not been sold might be subject to the decisions of a subsequent Minister in this Government, or indeed in a different Government, regarding their loan rate. Is that something that we should sanction?
Bill Rammell: I think that I answered the hon. Gentlemans point. We have made it clear throughout that we expect borrowersgraduatesto be treated in exactly the same whether their debt has been sold to the private sector or remains with the Government. There should beand there will be, as far as this Government are concernedequality of treatment.
The right hon. Gentleman suggested that we were seeking to make the product more agreeable by allowing purchasers to take more money from students. It is important to put that point rightthe Bill is about ensuring that the product does not become more disagreeable. It gives investors the certainty that we will not sell them one product and then legislate to turn it into another product. It is categorically and explicitly not about allowing purchasers to take more money from borrowers, as we made clear with amendments Nos. 8 and 9, which we have already discussed. Amendments Nos. 2 and 3 enable the Secretary of State to give undertakings about the power to make or amend loan regulations under section 186 of the Education Act 2002.
On the Opposition amendment to Lords amendment No. 2, it may help if I say a little more about how we expect the undertakings, which would be included in the contract for the sale of the loans, to work. The aim of any such undertakings would be to provide a degree of certainty to potential purchasers that the Government will not amend regulations after a transaction in a way that would affect the nature of the asset and decrease the value of the asset that had been sold or do so in a way that was not set out at the time of the sale. No one buys a product in the expectation that it will turn into something completely different. Purchasers will be concerned to guard against that, not to seek to improve their position. The undertakings that we envisage will not be about changing or promising to change loan terms to improve the lot of the purchaser but about giving certainty about the current position and the Governments intentions over time. The exact wording of such undertakings, if given, would have to be worked out as an integral part of the sale documentation.
Through those contractual undertakings, the Secretary of State can set out his intentions not to make particular amendments to loan regulations after a sale or to limit changes to the regulations in particular ways. For example, he might undertake not to propose an increase in the repayment threshold by more than a certain factor in a given year or to change the regulations only to do something that purchasers could predict. Paragraph (a) is necessarythis goes to the heart of the Opposition amendmentto avoid any doubt that such undertakings can be made. The loan terms will continue to be governed by regulations, which are subject to scrutiny and approval in the House. On that basis, I urge the hon. Member for South Holland and The Deepings to withdraw his amendment.
I turn to amendments Nos. 7 and 16. If the Government use undertakings in sale contracts, they will be made public as part of the sale process. That brings me to amendment No. 7 on reporting to Parliament. In this House and in another place, value for money has rightly
been at the centre of our discussions. Having listened carefully to the arguments, we propose to strengthen the commitment that I gave on Third Reading that the Government would report to Parliament after each transaction. Amendment No. 7 places a statutory obligation on the Secretary of State to report to Parliament within three months of each transaction. He must inform Parliament about the value-for-money assessment that his Department made that led to the transaction going ahead. The report should reflect any Treasury guidance on the required procedures used across the public sector for assessing value for money. The hon. Member for South Holland and The Deepings referred to the role of the National Audit Office and the Public Accounts Committee. The NAO and the PAC have already made clear their intention to report on these matters. The hon. Member for Bristol, West (Stephen Williams) got it rightthis is not a matter to be dictated by Government but a matter for the NAO and the PAC, which have made their position clear.
In response to the Opposition amendment to Lords amendment No. 7, I am happy to put it on record that the report should cover any effect that the transaction would have on borrowers. As we have stressed throughout the passage of the Bill, protecting the position of borrowers is one of our key and fundamental objectives. I acknowledge the diligent efforts of Opposition Members to press us on how we will meet that aim. I believe that the safeguards in the Bill, not least those contained in amendments Nos. 8 and 9, mean that the sales transaction, including any undertakings that may be given, will have no detrimental effect on borrowers. We expect that the report to Parliament would confirm that. I hope that the hon. Member for South Holland and The Deepings will agree that the commitment that I have made on the record is the appropriate response to what he has sought and argued for. I hope that he is therefore reassured and urge him to withdraw the amendment.
Mr. Hayes: The Minister is being typically generous, but will he clarify this point? I appreciate that the Government do not expect there to be any impact on borrowers, but is he saying that an assessment of that would be included in the report regardless of whether there was an impact?
Amendments Nos. 11 to 14 make drafting changes to clause 6 on information about borrowers. There must be no doubt about how HMRC information may be disclosed in relation to loan sales. Amendments Nos. 11 and 12 provide a simpler expression that disclosure may relate both to loans being offered for sale and those that have already been sold. Amendment No. 13 describes a class of disclosure of anonymised HMRC financial information, so that it may go to those who have a purpose connected with the loans being offered for sale or that have been sold. We believe that that is the most effective way to ensure that this kind of non-personal data can be given to those who need that information, because across a long-term programme of loan sales we could never create a complete list of the potential purchasers, investors and financial institutions that could provide advice about a transaction. On the much more restricted access to personal data, amendment No. 14 is
intended to make it clear that the narrow definition of an actual purchaser or its agent should include the purchasers auditor. Without the explicit reference, that might not be understood.
The amendments in this group enhance the Bill. They provide a more effective framework for the programme of sales at the same time as strengthening accountability to Parliament. We have had constructive engagements and we have a stronger Bill. On that basis, I commend the amendments to the House and hope that the Opposition can feel free to withdraw their amendments.
Mr. Hayes: I am grateful for the Ministers remarks. He is right: this has been a model of good parliamentary dialogue. We have had a useful and constructive series of engagements on the Floor of the House, in the other place, in Committee, and, if I may put it this way, behind the scenes. We have exchanged letters between Ministers and shadow Ministers in a manner that was altogether more co-operative than the public might expect or anticipate. They would be alarmed if they knew quite how friendly our relations have been, because some love to paint us in a less favourable light than we deserve, do they not, Mr. Deputy Speaker?
The Minister has made important changes to the Bill, which in essence give the House the power to assess the Governments behaviour in an entirely reasonable way. That is to say, it can make an informed judgment based on empirical evidence about whether value for money has been assured. We now hear, and I am delighted that the Minister has said so, that that will include an assessment of the impact on borrowers of just the kind that I asked for in my remarks a few moments ago. On that basis, how could I possibly complain about the amendments before us, or the Ministers response to them?
The Opposition have fulfilled their purpose. We have scrutinised the legislation with assiduity, and I thank my hon. Friend the Member for Reading, East (Mr. Wilson), other Conservative Members, and indeed, although it is against my instincts ever to be nice to Liberals, I thank the hon. Member for Bristol, West (Stephen Williams). On the basis of those assurances, I am delighted to say that I beg leave to withdraw the amendment.
[Relevant documents: The Nineteenth Report from the Joint Committee on Human Rights, on Counter-Terrorism Policy and Human Rights: 28 days, intercept and post-charge questioning, HC 394, the Second Report from the Committee, on Counter-Terrorism Policy and Human Rights: 42 days, HC 156, and the Twentieth Report from the Committee, on Counter-Terrorism Policy and Human Rights: Counter-Terrorism Bill, HC 554.]
That the draft Terrorism Act 2006 (Disapplication of Section 25) Order 2008, which was laid before this House on 21st May, be approved.
The Government agreed during the debates that we had during the passage of what became the Terrorism Act 2006 that there should be a requirement for the annual renewal by Parliament of section 23 of the Act, which extends the maximum period of detention of terrorist suspects from 14 to 28 days. The order before us, therefore, disapplies section 25 of the Terrorism Act 2006 for a period of one year beginning with 25 July 2008, thereby extending the maximum period of pre-charge detention for terrorist suspects of 28 days for a further year.
Without rehearsing our deliberations on the most recent Counter-Terrorism Bill, I can say that, as the House will know, nothing in it impacts on this provision. Indeed, the provision for a specific extension beyond 28 daysin grave and exceptional circumstancesis predicated and built on the annual renewal of 28 days. The measure is important in itself, and in the context of the Bill. Pre-charge detention has been the subject of considerable debate over the past 12 months in this House and, in the broader sense, in the Select Committee on Home Affairs and the Joint Committee on Human Rights. I do not want to go over those debates here, but it is worth reminding ourselves why Parliament agreed to the exceptional 28-day limit.
As the House will be aware, terrorist investigations can be hugely time-consuming and the increase from 14 to 28 days was, the House judged, necessary, primarily as a result of greater use of encrypted computers and mobile phones, the increasingly complex nature of terrorist networks that have to be investigated and, not least, the increasingly international nature of terrorist networks, meaning greater language difficulties and a greater need to gather evidence from abroad. The safety of the public is, of course, paramount and it is the responsibility of the Government and security and law enforcement agencies to protect our citizens from the threats posed by terrorism.
The first priority must be to stop terrorist activity taking place rather than dealing with its consequences. However, where we do identify those who are engaged in terrorism, we need to ensure that we have the right tools to investigate and prosecute those involved. In much police work, the investigation takes place after a crime has been committed. In such cases there will often be a victim, possible suspects, witnesses to the crime and forensic material from the crime scene. The police will investigate the crime and may arrest the suspect when they have already gathered a considerable amount
of admissible evidence. In such cases, only a few days may be needed to question the suspect before a decision is taken on whether to charge them for an offence.
The House knows that terrorism cases are different, but none the less, to the full extent possible, they should be dealt with in the normal and routine context of our laws. However, because of the severe consequences of a terrorist attack, the police and security services invariably need to intervene before it takes place. Critically, they may need to intervene at a very early stage in an investigation, before they have had the opportunity to gather any admissible evidence, and on the basis of limited intelligence about who and what is involved. As Assistant Commissioner Bob Quick said recently, in his evidence to the Counter-Terrorism Bill Committee:
In some investigations, we have seen that
materialise so quickly that on public safety grounds we have had to act pre-emptively before we have had the opportunity to exploit pre-arrest evidential opportunities. That places a huge burden on the senior investigating officer. [Official Report, Counter-Terrorism Bill Public Bill Committee, 22 April 2008; c. 14, Q8.]
The provisions for extended pre-charge detention for up to 28 days in the Terrorism Act 2006 take account of these practical and unique difficulties, and the decision to increase pre-charge detention limits from 14 to 28 days has, I believe, been justified by subsequent events and it means that we have been able to bring forward prosecutions that otherwise might not have been possible. Indeed, both the police and the Director of Public Prosecutions have made it clear that the 28-day limit is necessary. From when the power came into force in July 2006, six people have been held for between 27 and 28 days, three of whom were charged.
We accept that the Government should endeavour to provide detailed statistical information on the use of the 28-day limit in advance of the renewal debates and, once the joint Home Office-police review of pre-charge detention statistics has been completed, we expect to be able to provide more detailed information on the outcome of detention, including the charges brought against those charged. Let us be clear: the application for extension is a rigorous process. A Crown Prosecution Service lawyer makes the application for extensions beyond 14 days, and the senior investigating officer is present. Defence solicitors are provided in advance of each application with a written document setting out the grounds for the application. The applications are usually strenuously opposed and can last several hours. The officer may be questioned vigorously by the defence solicitor about all aspects of the case.
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