Sales: supplemental

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

I hope that this debate will be rather shorter than our first one. However, it was important—I am grateful for your indulgence, Miss Begg—to deal with fundamental issues respecting the new power at the beginning of our consideration.

My question about clause 2 is straightforward. The clause will grant the Secretary of State flexibility in sales contracts that he thinks are appropriate, in addition to those specifically expressed elsewhere in the Bill. The explanatory notes to clause 2 state:

“The Government intends to require purchasers to use HMRC and the SLC as part of the sales contract.”

If that is the case, why is it not in the Bill? Why are Ministers given flexibility in that regard?

I have a couple of questions about subsection (4). If the Government lowered the threshold at which loans could be paid back, the purchaser would get more money than they expected. The subsection will allow the payment of more money as compensation if purchasers get less money as a result of the threshold being raised. What will happen if a future Government do the reverse? Is reverse indemnity written in, or does it only go one way?

On subsection (6), what will happen if borrowers have a dispute? Currently, they must deal with the Student Loans Company. I get an awful lot of complaints that the SLC has failed miserably to stop taking payments after the loan has been paid off. It is quite a common piece of casework in most MPs’ offices. How will the Bill change those arrangements? Will graduates have to deal with the private sector, or will they continue to deal with the SLC? Who is the intermediary mentioned in subsection (6)?

In response to the hon. Gentleman’s question about the flexibility in sales contracts and the notes’ reference to HMRC and the SLC, it will be enforced through the contract, and we do not believe that it needs to be explicit in the Bill. In response to the  hon. Lady’s question about the transference of risk if the repayment threshold is lowered, it could be described as a one-way process. The measure is about the transference of risk. It is fairly unlikely, whatever Government are in power—although it cannot be ruled out—that the threshold will be reduced. The process is about encouraging and asking the private sector to take on longer-term risk, and protections must be in place for that to happen.

To return to the question of why HMRC and the SLC are not included in the Bill in this regard, it is possible that student loan repayment systems might change. The legislation is enabling—it is about a longer-term programme, which is why it is important to include such measures in contracts and not in the Bill.

The Minister did not answer my question about subsection (6). Whom will graduates deal with in case of a dispute? Given that disputes are quite common, the question is of concern to graduates.

Our intention is that graduates repaying debts to the private sector should be able to deal with the same independent assessor to whom they can refer at the moment in respect of debts to the Government.

The hon. Lady raised a point about complaints that students are overpaying at the end of their term of repayment. If one looks at the evidence, two thirds of the overpayments are of less than £400. That happens because it is difficult to predict exactly when somebody will reach the end of their loan, given the nature of the taxation system through HMRC. However, in response to Ministers, the Student Loans Company is rightly looking at how it can improve the system in the likely final year of repayments. It hopes to communicate directly with the graduate in question to put a stop to the repayments at an earlier stage, so that such overpayments do not take place. I hope that that answers the question.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.