My Lords, Islamic law forbids interest-bearing loans and that prohibition can be a barrier to Muslim students going on to attend our universities. I first became aware of this when I visited the Preston Muslim Girls High School as part of the Lord Speaker’s outreach programme. I talked about the work of the House and I tried to answer the girls’ questions. There was one question that I could not answer: why was there no sharia-compliant system of student finance? Many of the girls came from very religious backgrounds and some would not be able to accept interest-bearing loans. This meant that they could not go to university. They were certainly qualified to go—Ofsted rates their school as outstanding on every measure. The headmaster explained to me that when tuition fees were low, many Muslim students were able to attend university, financed by family and friends. However, since 2012, this has become much more difficult given the current level of fees and the real rate of interest now payable on student loans. As the excellent impact assessment to the Bill notes, the situation worsened in 2016-17 when maintenance grants were replaced by interest-bearing loans. The Muslim community is disadvantaged by all this. The impact assessment says that:
“The unmet demand for student finance consistent with the principles of Islamic finance might mean that some would-be students may be prevented from participating in higher education on the basis of their religious beliefs”.
The coalition Government took this problem seriously. In 2014, a BIS consultation had an astounding 20,000 responses. In their response to the consultation, the Government’s conclusion was clear, saying that,
“the Government supports the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.
However, they added that:
“Given the complexity of these issues and the time needed to resolve them, it is unlikely that any Alternative Finance product could be available before academic year 2016/17”.
That was in September 2014. We are already into academic year 2016-17, and too far into it for any scheme to be available for academic year 2017-18. Worse, I have been told privately that the scheme will not be ready until academic year 2019-20. That is seven years after the problem was recognised, five years after a solution was agreed and two academic years from now. Muslim communities have been disadvantaged for five years and face the prospect of another two years of it.
In Committee, I tried to persuade the Government to accept a deadline of 2018-19 for the introduction of a sharia-compliant system. I chose that date because Islamic finance experts assured me that a Takaful system could be put in place from a standing start within eight to 12 months. Some of these experts had advised the Government on the introduction of a Takaful system and knew what it would take to get it up and running. The Government rejected the idea of a deadline without even hinting at what they thought might be an introductory date. However, the Minister was kind enough to meet me to discuss the situation. He and his officials made it clear that the Government
were not prepared to accept any kind of deadline, nor did they give an estimate of when a sharia-compliant system might arrive. I repeated that I had been told that the problems with the Student Loans Company and HMRC were causing the delay and uncertainty, and that they had not assigned the scheme sufficient priority or sufficient resource. I explained again that prominent Islamic finance experts believe it should take no longer than eight to 12 months to put a system in place. These experts also point out that establishing the sharia-compliant help-to-buy guarantee scheme took only five or six months to develop and launch.
I also asked whether the department had told schools, and through them Muslim families, about the work going on around the Takaful system. The answer was no. The reason given was the desire to avoid raising expectations. I thought this was precisely the wrong answer. If the department had been in better touch with the Muslim community, it would have known that expectations had already been raised by David Cameron as long ago as 2013 when he spoke to the World Islamic Economic Forum in London and announced the arrangement of student finance on a sharia-compliant basis. That was four years ago. I thought that Muslim students, their families and communities had a right to know what progress was being made and when to expect a solution. That is why my amendment would require the Secretary of State to tell all relevant schools about the progress being made and to give an estimate of the likely date of availability.
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There is a frustrating irony in all this. The Government are to be congratulated on bringing forward enabling primary legislation, but it is surely wrong to have such a long delay and such continued uncertainty over the date of the scheme’s introduction. It is surely wrong not to understand the worries and concerns that this delay and uncertainty cause in the Muslim community. To refuse to report progress and to refuse to estimate a likely delivery date is to avoid responsibility. It does not treat the Muslim community as adults. The impact assessment, which talked about the implications for the Muslim community of the move from maintenance grants to interest-bearing loans and the introduction of the Takaful system, referred to the Government’s public sector equality duty. That has force. So does simply being honest, open and transparent with the Muslim community about progress and a likely availability date for Takaful financing. It is their children’s futures we are talking about.
In their 2014 consultation response the Government said:
“There is demand for the proposed Alternative Finance product and responses to the consultation indicate that this would enable many of those who have been or will be prevented from undertaking both FE and HE, to attend by removing the conflict between faith and funding”.
My amendment simply asks the Government to say when this conflict between faith and funding will be resolved. I beg to move.