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Lord Elton: My Lords, I take it that the substantial discussion--if there is need for one--on the need for urgency, will take place on the Business Motion that the Bill be taken in one day. We therefore have time to reflect on the balance between civil liberty and civil safety which is clearly here at issue.

Lord Monkswell: My Lords, I wonder whether I can ask the Government to review the announcement that they have just given to the House. If we look back to 1974 we can see that the original Prevention of Terrorism Act was passed in a 24-hour period shortly after the excesses of the Birmingham bombing. Some of us feel that the result of that action was that we introduced legislation in haste, realising that we would repent it at our leisure. It did a great deal of damage by aiding the IRA as a recruiting sergeant.

At that time there was a demonstrable need for something to be done by Parliament and that was done precipitously. The problem with which we are faced as parliamentarians is that there does not appear to be any justification that has been made public to parliamentarians about the urgency of the situation. As I understand it, we shall be presented with a Business Motion on Wednesday to consider the passage of the Bill through all its stages on that day.

I ask the Government to put forward their Business Motion tomorrow, Tuesday, for the consideration of the House. That will give time for consideration of the debate that will be conducted tomorrow on the subject, giving the terms of the emergency of which the Government are apparently apprised and effectively a day's delay before we consider the Bill with which the Government will present us. I put that forward as a plea.

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It would give us some measured opportunity to consider the circumstances of the situation of which the Government will no doubt apprise us.

Lord Strathclyde: My Lords, the main points made by the noble Lord, Lord Monkswell, will be taken up during the course of the debate on Wednesday. However, on the issue of the Business Motion, the reason why I came before the House this evening was to let your Lordships know of the Government's intentions and to warn people of both the Motion that my noble friend the Leader of the House is tabling this evening on the Order Paper for debate on Wednesday and also to let the House know of our intended timings.

The Bill would not be dealt with in this way unless we already had prior agreement and also if we did not believe that it was important and urgent for the Bill to be agreed before the House adjourns for the Easter Recess. I hope that the House will recognise the need for this legislation when it comes to be debated on Wednesday and also that the reason I came forward with the Statement today is to keep everybody well informed of our intentions.

Education (Student Loans) Bill

7.10 p.m.

Read a third time.

Baroness Farrington of Ribbleton moved Amendment No. 1:


After Clause 1, insert the following new clause--

Refusal of student loan not refusal of credit

(". A refusal to an eligible student of a private sector student loan shall not be regarded as a refusal of credit for any purpose and may not be required to be declared in any other application for credit.").

The noble Baroness said: My Lords, the Minister has said on many occasions during the passage of the Bill that the private sector must be free to pick and choose which students to lend money to. Surely it is the case that, unlike other forms of applications for loans from the private sector, the institutions envisaged under the Bill will be receiving public subsidy. Unlike an application for a loan for a car or for a personal loan, an application in this case may be turned down because of the institution the student wishes to attend or the course he wishes to follow.

I do not intend to raise all the issues mentioned during previous debates. Suffice it to say, this amendment does not seek to challenge the right of the private sector to refuse to give loans. However, the amendment would at least guarantee student applicants protection from possible future discrimination in their work or private finance. I beg to move.

Lord Addington: My Lords, the amendment says only that if someone is refused a subsidised loan for his education from a privately owned company, the company involved will have to say why. It is not that onerous a statement. A refusal of credit may follow someone for the rest of his life. The student has not created the situation--it is the course he or she has

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chosen to follow. An institution may decide that graduates in English are not a good credit risk. However, someone who passes the examinations for a degree in English well and who acquires a good job may become a good credit risk whereas someone who takes a law course, passes very badly and becomes a very bad lawyer may become a bad credit risk. Surely, when one is taking account of variables and parental income, that should not be held against the student.

The Minister of State, Department for Education and Employment (Lord Henley): My Lords, we return to an amendment we discussed at earlier stages. I resisted those similar, if not identical, amendments for good reasons. I am still not persuaded of the need for such an amendment.

The amendment, if agreed, would have consequences which go far beyond the business of student loans. I simply do not think it would be practical. It is another over-regulatory amendment. It would not only regulate the private lenders of student loans but private lenders of all kinds. That is clear from the first part of the amendment which says:


    "A refusal ... of a private sector student loan shall not be regarded as a refusal of credit for any purpose".
That would affect private lenders of any kind.

Financial institutions, when considering applications for credit of any kind, must be allowed the freedom to make reasonable, commercially sound decisions. We could not expect them to make special provision for students on the basis of an earlier application for credit, perhaps dating back many years, which probably involved a different financial institution.

We do not lay down rules on what banks and building societies can and cannot do when considering applications for current accounts and overdrafts. We do not lay down rules on whether or not information about those applications, which are not always successful, should be disclosed when the student applies for credit in the future. There is simply no precedent for the provisions which the amendment demands.

The noble Baroness again puts forward the argument, with which I believe I dealt at an earlier stage, that public subsidy is involved in the loans and therefore different treatment applies. I accept that there is public subsidy but it is only a small part of what we are talking about. The major part of the risk is still with the private sector institutions and that is one of the main purposes behind the Bill. It is the banks themselves which have to bear that risk. It is right that they should be able to make their own decisions accordingly.

The noble Lord, Lord Addington, said that the information will follow the student for the rest of his or her working life. It is wrong to assume that information about past applications--perhaps many years in the past--will necessarily be of any use or interest to future prospective lenders. The economic climate is always changing and as it does lenders' propensity to lend will change. The applicant's own circumstances may change. He may go from being a not terribly well off student reading English, as I think the noble Lord put it, to being a high flying merchant banker, or even, dare I say it,

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a lawyer. It is simply naive to imagine that a mortgage application from a creditworthy young professional will be turned down because he or she was refused a student loan years earlier.

The financial institutions choose their methods of assessing applications and their own lending policies. Those methods and policies may change and will certainly differ between institutions. They know how much their policies vary and that is part of the financial market. Nevertheless, if any financial institution wishes to have a complete credit history before extending credit we believe that it should be able to have it. To refuse that would be unfair and, as I said earlier, over-regulatory. For that reason I hope I can persuade the noble Baroness that the amendment is unnecessary. I trust that she will not feel it necessary to press it this evening.

Baroness Farrington of Ribbleton: My Lords, in this Bill we are dealing with an unusual set of circumstances. As the noble Lord, Lord Beloff, said, we are dealing with a situation of paying fishmongers to sell fish. Subsidised loans are not in the same category as private sector loans. The Government believe that there will not necessarily be any connection between a refusal of an application for credit and what will happen in the future. We remain highly dissatisfied with the Government's position. The Minister leaves me no alternative but to divide the House.

7.18 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 59; Not-Contents, 74.

Division No. 2

CONTENTS

Addington, L. [Teller.]
Berkeley, L.
Blackstone, B.
Blyth, L.
Borrie, L.
Cocks of Hartcliffe, L.
Craigavon, V.
David, B.
Dean of Thornton-le-Fylde, B.
Desai, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Ezra, L.
Falkland, V.
Farrington of Ribbleton, B.
Geraint, L.
Graham of Edmonton, L.
Grenfell, L.
Hamwee, B.
Harris of Greenwich, L.
Haskel, L. [Teller.]
Hilton of Eggardon, B.
Howie of Troon, L.
Jay of Paddington, B.
Jenkins of Putney, L.
Judd, L.
Kennet, L.
Kilbracken, L.
Lawrence, L.
Lockwood, B.
Lovell-Davis, L.
McIntosh of Haringey, L.
Mackie of Benshie, L.
McNally, L.
Masham of Ilton, B.
Merlyn-Rees, L.
Meston, L.
Nicol, B.
Palmer, L.
Ponsonby of Shulbrede, L.
Prys-Davies, L.
Rea, L.
Richard, L.
Rodgers of Quarry Bank, L.
Russell, E.
Seear, B.
Sefton of Garston, L.
Stoddart of Swindon, L.
Taylor of Blackburn, L.
Taylor of Gryfe, L.
Tonypandy, V.
Tordoff, L.
White, B.
Williams of Crosby, B.
Williams of Elvel, L.
Williams of Mostyn, L.
Winchilsea and Nottingham, E.

NOT-CONTENTS

Abinger, L.
Addison, V.
Aldington, L.
Alexander of Tunis, E.
Blaker, L.
Blatch, B.
Bowness, L.
Brougham and Vaux, L.
Burnham, L.
Caithness, E.
Carnegy of Lour, B.
Chalker of Wallasey, B.
Chesham, L. [Teller.]
Cochrane of Cults, L.
Courtown, E.
Cranborne, V. [Lord Privy Seal.]
Cumberlege, B.
Davidson, V.
Dean of Harptree, L.
Denham, L.
Downshire, M.
Dundonald, E.
Eden of Winton, L.
Elton, L.
Ferrers, E.
Fraser of Carmyllie, L.
Gardner of Parkes, B.
Gisborough, L.
Glenarthur, L.
Goschen, V.
Harlech, L.
Harmar-Nicholls, L.
Harmsworth, L.
Hemphill, L.
Henley, L.
Hertford, M.
Hogg, B.
HolmPatrick, L.
Hothfield, L.
Howe, E.
Inglewood, L.
Jenkin of Roding, L.
Kimball, L.
Kitchener, E.
Leigh, L.
Long, V.
Lucas, L.
Lucas of Chilworth, L.
Lyell, L.
McColl of Dulwich, L.
Mackay of Ardbrecknish, L.
Massereene and Ferrard, V.
Mountevans, L.
Napier and Ettrick, L.
Norfolk, D.
O'Cathain, B.
Prior, L.
Rawlings, B.
Rennell, L.
Renton, L.
St. Davids, V.
Saltoun of Abernethy, Ly.
Savile, L.
Seccombe, B.
Skelmersdale, L.
Strange, B.
Strathclyde, L. [Teller.]
Swinfen, L.
Thomas of Gwydir, L.
Trumpington, B.
Ullswater, V.
Wade of Chorlton, L.
Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.

1 Apr 1996 : Column 75

7.27 p.m.

Lord Addington moved Amendment No. 2:


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