My Lords, I will speak to Amendment 14 and to Amendment 16, which is linked to that, and will say a few words in support of Amendment 1.
It is interesting that a large part of the Bill is about insolvency—what happens if a college becomes insolvent. Yet it does not say very much about what happens if a poor student, through no fault of their own, becomes insolvent because of debt problems arising from the fact that their college no longer exists. We also encourage private providers—I say right at the outset that there are many good private providers, who have an exemplary record and are very worth while. Sadly, however, some providers have caused immeasurable harm to young people, and we need to ensure that there is a proper safety net for those young people.
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It is interesting that just in the last few months, three private providers have gone into liquidation. Millions of pounds have been lost, and of course thousands of students have been put into a very difficult situation. I will highlight just one of those examples. John Frank Training was a London-based provider with a satellite office in Preston. This private provider went into liquidation on 30 November, leaving no assets, despite recording a profit of £1.3 million in the first half of last year. The Skills Funding Agency is currently refusing to write off the students’ debts, even though they will not get training from John Frank Training. Some £6.4 million was paid to 2,200 learners to complete their training with the provider. As one unlucky student said:
“I’ve emailed the SFA three times and got no response and the loan company haven’t been helpful … They finally emailed me on December 22 to say transfer your loan to a new provider. I’ve tried to do this but you can’t transfer if you have already started a programme”.
Therefore a number of issues need examining. I pay tribute to the Minister and his staff, because they have been anxious to help and have been supportive on this. I hope that between now and Third Reading we can come to some satisfactory outcome on this issue. We are talking about young people whom we have encouraged to do further courses and training.
My amendment seeks to put in place a contingency fund to ensure that where a further education body closes down, there is financial support available for students to ensure that they are reimbursed the fee they have paid for the remainder of the course, which they will be missing out on. The cost of embarking on a further education course when over the age of 18 is not insubstantial. For example, Leeds City College charges fees up to £1,100, plus exam fees and any course extras. The introduction of such a contingency scheme would, I hope, help to address issues such as the one highlighted by James Kewin, the deputy chief executive of the Sixth Form Colleges Association. He said:
“We are concerned about the potential knock on effect of an insolvency regime on bank support. Existing loans and overdrafts may have to be renegotiated with potentially serious increases in costs and new support harder to obtain. In both cases this will act as a further drain on college finances”.
Presumably, if banks are more confident that students have a financial safety net should the provider have to shut down, they are less likely to refuse loans or apply stricter terms to their loans.
Finally, on Amendment 1, which I highlighted at Second Reading, we are talking about many students from some of our most deprived communities—and
we talk a great deal about social mobility. If their parents are entitled to tax credits—which just takes them up to a living wage—when they are encouraged to take up an apprenticeship and do so, their financial support goes. Therefore, that is a disincentive to carry on an apprenticeship. There is evidence to show that because of this disincentive, quite a number of students have not taken that opportunity. This amendment will help to ensure that we protect the very people we want to encourage to take up apprenticeships.