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Lord Ponsonby of Shulbrede: My Lords, as we have heard, the Minister's argument time and again has been that a student loan should be treated like any other commercially available loan. We have heard the argument advanced that because there is a public element to the loan, it should be treated with a greater degree of transparency. We heard a second argument from the noble Lord, Lord Addington, that a student has no choice but to take out a loan. Surely we do not want a young person to exercise his or her choice not to be a student.

The third argument, which I believe we should revisit and which has not yet been mentioned tonight, relates to the ombudsman. The Minister said that a student would be free to go to the ombudsman without a written statement of the reasons for refusal. I think it is

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extremely unlikely that a young student, busy with his or her studies, could be bothered to make a frivolous complaint about a rude bank manager unless he or she had a piece of paper to back up that complaint. I find that a difficult scenario to envisage.

In Committee, the noble Lord, Lord Henley, several times used the phrase "working with the grain" of the private sector. While I understand the sentiment, I remind him that the state is the client and the banks are the contractors. I believe that it is for the banks to work with the grain of the state in providing a proper degree of transparency and accountability for the Government to ensure that they are doing their work properly.

Lord Henley: My Lords, I do not intend to follow my noble friend Lady Park because I do not believe that what she had to say was strictly relevant to this particular amendment. However, I intended to pick up one or two points when we come to Bill do now pass, which might be a more appropriate time to address her anxieties relating to parliamentary scrutiny.

I return to the amendment itself. It is a matter that has been addressed both at Committee and Report stages. I have a sneaking suspicion that the noble Lord, Lord Ponsonby, was not here at Report stage. I apologise if he was here. At that time I addressed the very point about the ombudsman. It is our understanding that the ombudsman does not need specific written evidence to take action to deal with the anxieties raised on earlier occasions. We have made it quite clear that what is required is evidence of any kind.

Lord Ponsonby of Shulbrede: My Lords, I thank the noble Lord for what he has just said. Unfortunately, I was abroad and was not here for the Report stage. I read the report of those proceedings in Hansard. I raise the issue again because I found his response inadequate. It is very difficult to imagine a young busy student pursuing a complaint without any paper to back it up on the basis that he or she feels hard done by.

Lord Henley: My Lords, I made clear that there was no need for the evidence to be written. I expanded on the subject of what kind of evidence might be required in a letter that I sent to the noble Lord, Lord Tope. I am sorry that he is not able to be here. Similarly, a letter was sent to the noble Lord, Lord Morris of Castle Morris. I well understand why he cannot be here. I copied those letters to a number of noble Lords--I even copied my letter to the noble Lord, Lord Morris (but that is neither here nor there) setting out the kind of evidence that could be put forward in making use of the banking ombudsman. I believe that the banking ombudsman has himself made clear, as I made clear at Report stage, that he feels perfectly free to intervene in these matters.

We are not opposed to students being given the information that the amendment of the noble Lord, Lord Addington, sets out. We very much hope that private lenders will do so willingly, particularly as most, if not all, of the applicants will be existing or potential current account customers. This must be a matter for

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them. They are lending and risking in the main their own money. They must be free to reject applications and decide what to tell such applicants. We want a normal lending arrangement between lender and borrower rather than the extensive regulation that this amendment seems to imply.

I take issue with the noble Lord, Lord Ponsonby, when he says that students have to take out loans. Students are not forced to take out loans; nor do they have to take them out with the private sector. Students are free not to apply for private loans or indeed any loans. If economic circumstances force a student to take out a loan, he or she is always free to apply to the Student Loans Company. All eligible students will continue to have a right to a loan from that company and a right to know the reasons for any refusal. But no student will have a legal right to a subsidised private sector student loan. It follows that the normal lender/borrower relationship, in which there is no legal right to reasons for refusal, will apply.

The noble Baroness, Lady Farrington, raised the particular worries of disabled students. As this is Third Reading, it will not be a matter of particular concern if I say that I shall look at some of the points that SKILL has raised with the noble Baroness. We shall make sure that the contracts with the lenders require exactly the same terms for all borrowers, whether disabled or not. We will not allow them to discriminate under this Act against individual students on the grounds of their disability. The contracts will prevent that.

The noble Baroness will recall that at an earlier stage I resisted an amendment which tried to write that into the Bill. Thereafter, the usual provisions of the Disability Discrimination Act and the service provisions will apply and the student will have the appropriate protection of that Act. I prefer to write to the noble Baroness about it because I cannot remember the precise details as to when those provisions will come into effect, what they are and what protection they will give. I was not aware that she was going to raise the issue of disabled students. I am sure the noble Baroness will accept that that Act brought in considerable further protection for disabled people in employment, service provision and other matters, and that it is a matter for another day. However, it is a matter on which I hope to write to the noble Baroness.

For the reasons I gave earlier, I hope that the noble Lord, Lord Addington, does not feel it necessary to press this amendment tonight.

Lord Addington: My Lords, the noble Baroness, Lady Farrington, raised a very important point when referring to disabled students. The Minister's reply was reassuring in so far as it went without giving a reason. I believe that this amendment justifies itself, certainly on the ground of getting the Minister's reply into Hansard. I had assumed that the Disability Discrimination Act covered this to an extent. However, as the noble Baroness spoke, I thought that possibly I was wrong. I have been placated by what the noble Lord has said as to that matter.

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As a matter of principle, the idea that this is a normal credit arrangement is not one that holds water. It is a fairly open secret that the Government would like to have loans provided mainly by the private sector. When the initial loans scheme came out, they wished it to be provided by the private sector. It was very open, but none of the private sector wished to take it up. In this case, the loans will account for a high percentage of people's income, especially those in the lower income bracket given the parental background. That is why the amendment is called for.

In those circumstances, it seems appropriate that a reason is given. The Minister says it is hoped that a reason is given. Surely, to require that a one paragraph letter is provided saying under what criteria the loan has been refused is not asking too much. I do not believe that at this stage my case will be helped by pressing the amendment. However, I believe that important points have been raised which will hang over the whole issue. With those comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Schedule [Consequential Amendments]:

Baroness Farrington of Ribbleton moved Amendment No. 3:

Page 3, line 21, after ("student",") insert--
("(aa) after sub-paragraph (1)(c) insert--
"(d) make provision for the level of sums paid by the person borrowing in respect of repayment of any loan to be linked to the income of the person borrowing",").

The noble Baroness said: My Lords, at no stage have the Government answered satisfactorily the question put to them by many noble Lords in this House and, most importantly, by the CVCP, regarding the need for a proper income-contingent loan scheme with collection of repayments through the tax or national insurance system. Why do the Government seek to subsidise the administrative costs of setting up a private sector loan scheme based on a system of repayment that is fundamentally flawed? Why would any private sector institution want to participate in a scheme that so many wish to see radically altered? Even the Conservative Party's own national policy group on higher education want to scrap the current system. How can the Minister justify bringing in this extension within such a widely discredited method of repayment?

The widely welcomed national committee of inquiry into higher education will report just as the proposed private sector loan scheme comes into effect. Any objective observer can see that the current scheme has no friends, and will be scrapped. Surely now is the time for the Government to recognise that it cannot be everyone who has spoken, other than the Government, who is out of step. On this occasion the Government are out of step. They should respond to the widespread concerns which have been raised. I beg to move.

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