Sharia Law Student Loans

Debate between Bob Stewart and Simon Danczuk

Tuesday 24th June 2014 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

I am pleased to have secured this debate on an issue that has been raised with me by my constituents. A few months ago, I was visited at my constituency office by Fatima Riaz and her two daughters, Saffiyah and Helima, who lobbied me on the issue of loans for Muslim students. I have to admit that I was not up to speed on the issue, but that was quickly cured by the girls, who explained their frustrations with the system. Saffiyah and Helima did not stop there; they organised a letter-writing campaign to show me how many people in Rochdale are affected by the issue.

It was inspiring to see young people engaged with a political issue and lobbying their MP, and the huge pile of letters on my desk is a testament to their success. It is on behalf of these young activists and the many constituents who have written to me that I have secured this debate today.

The Office for National Statistics describes British Muslims as

“a young, tightly clustered, but often disadvantaged community”.

Although that may be true for Rochdale, I would add that it is also a highly ambitious community. Most are ambitious for themselves and are highly entrepreneurial, setting up many new businesses that are helping to move the town forward. Many are also ambitious for their families and care deeply about the education of their children. They are determined that their children should have better lives than them and see education as the route to success in the future.

A university degree is now essential to unlock the door to many professions in this country. Whether that is a good thing or not is open to question—I remain of the view that we should be doing more for young people who do not go to university—but that is the reality of the situation in this country today, so it is no surprise that young Muslim people in my constituency are desperate to go to university and get the qualifications they need to get on in life. They want to improve their own employment prospects and to continue a great tradition of Muslim scholarship at the same time.

Members can imagine their dismay when they find that the student loans on offer to help with astronomical university fees are not compatible with their religious beliefs. Essentially, they are being asked to choose between the future they want for themselves and their own religious convictions. That is not a choice we should be asking anyone to make. It is an unacceptable situation. I understand that not all Muslims feel that way and that there is a degree of theological argument about the issue. I would not dream of wading into that particular debate, but I will briefly set out the issue as I see it, for the benefit of the House.

In Islamic teaching and in some other religions, there are rules about the charging and receiving of interest. Under the old student finance arrangements, that was not much of an issue because interest rates on student loans were tied to the retail prices index, so they were not considered commercial loans. The vast majority of Muslim students felt that as long as the interest was in line with inflation the loans were compatible with their beliefs.

The issue came to a head with this Government’s decision to overhaul the student loans system when they came into office. It is fair to say that that decision was not their most popular one among certain coalition Members, and it was certainly not popular with the public. The new loans have a real interest rate that operates on a sliding scale, depending on the graduate’s income once they have left university. According to the National Union of Students, many Muslim students feel that the new arrangements are not compatible with Islamic teaching because of the real interest rate.

That means that many Muslim students are left to rely on their parents to fund their education. That was sometimes possible under the old system, which had lower fees, because parents could save up the money for years in advance of their children going to university. The fees were about £3,000 per year, so it was not easy, but it was possible. Under the new system, with fees of up to £9,000, that option is now out of reach for the vast majority of Muslim families.

In fact, Muslim students who are unable to get loans are actively discouraged from going to the best universities, because they have the highest fees. That forces agonising choices on parents, who have to explain to their children that they cannot afford to send them to the best universities, even if they get the required grades. That has created an unfair playing field in higher education and discriminates against Muslim students, especially those from poor families. Of course, the Government know that, because it was identified as an issue in their equality impact assessment when they announced the new student loans system in 2010. They have now had at least four years to sort it out.

[Bob Stewart (Beckenham) (Con)]

Forgive me for intervening, Mr Speaker. I am just anxious to learn whether there are not Muslim banks or sharia law banks to cater for Muslims who cannot pay what contradicts their religious beliefs, because I thought that there were such banks.

[Simon Danczuk]

The hon. Gentleman makes a good point, which I will come on to. The United Kingdom is very good on sharia-compliant financial services, but because the system is Government-run, the process for paying tuition fees for going to university needs to be matched by a sharia-compliant system. The same issue applies to advanced learner loans and business start-up loans, which are often overlooked in debate about this matter.

Thanks to some great lobbying work by the National Union of Students, the Federation of Student Islamic Societies and others, the Government agreed to take action. In a debate on the then Education Bill in another place, Baroness Verma said the Government would “seriously consider” changes and would seek to

“address the doubts that members of some faiths might have”.—[Official Report, House of Lords, 1 November 2011; Vol. 731, c. 1204.]

That was in 2011; we are now in 2014, and there is still nothing on the statute book to address this inequality. I find that staggering, given that the Government—to their credit—have taken action on the similar issue of Islamic mortgages and on Government bonds. There is now a thriving Islamic finance sector in the UK, with 22 banks offering services that comply with sharia law, so why the delay with student loans?

As far back as October 2012, the Minister for Universities and Science—he is now in his place—said that the Government had

“identified an alternative Shariah compliant system”.—[Official Report, 24 October 2012; Vol. 551, c. 934W.]

The system works using a murabaha scheme, which is interest-free but still costs the students the same amount overall. That point is important. Muslim students are not seeking to pay less than other students. They are simply asking for a loan system that fits their religious views. It is also important to say that any new scheme should be open to all students, not just to Muslims.

I understand that the Government are consulting widely on this matter, and I am pleased that they are doing so, but I question why it has taken so long to start the consultation, given that the issue was identified back in 2010. In the Government’s own equality assessment published in 2012, they said that changes would require primary legislation, but we have just seen the Government’s final Queen’s Speech of this Parliament and I could not see anything about this issue or any other Bill in which it could be addressed. I hope that the Minister will explain why that was the case and confirm that that means that there will be no real action on the issue in this Parliament. If that is the case, it is extremely disappointing. My constituents will feel that the Government simply do not see their education as a priority. It is difficult to escape the conclusion that they are right.

Getting more British Muslims into higher education in this country should be a priority for the Government. There are 2.7 million Muslims in England and Wales, but according to the Office for National Statistics, a third of those of working age have no formal qualifications. British Muslims are also the least likely of any religious group to have a degree and the most likely to be unemployed.

This inequality has wider social and economic consequences. It leads to the under-representation of British Muslims in public life and the professions. That can be seen clearly in Parliament. Out of 650 Members, only eight are Muslim. If Muslims were represented proportionately, the number would be closer to 30. That means that there are fewer people to speak up for Muslims in Parliament.

The Prime Minister has recently decided to talk about “British values” in schools. I agree with him that that is important but I say to the Minister that I think that “British values” include the right to a good education for all, regardless of religious views. Given that his Government have failed to deliver that, I suggest that the Government be more careful when lecturing British Muslims about “British values”.

Under-representation of British Muslims is not confined to politics but stretches across society to the media, academia and the law. That fuels segregation and ignorance, which hold us back as a country. There is also an economic dimension. By denying Muslim students equal access to higher education and business loans, we are wasting the potential of thousands of our citizens.

These young people could go on to found successful businesses, cure diseases or go into teaching and inspire new generations of students, but they are being deterred by the current policies of this Government. That is a tragedy for them, but it is also a tragedy for the country. The best resource we have is our people and we must not let their potential go to waste.

I am sure that the Minister agrees, but I make this point to impress upon him the urgency of rapid action on the issue. It now appears that we will have to wait until 2016 for any new system to be implemented. That means that at least five cohorts of students will have been let down by the system. That is an unacceptable waste of young talent.

I want to finish by reminding the House of the words of the Prime Minister at the World Islamic Economic Forum in October last year. He said:

“Never again should a Muslim in Britain feel unable to go to university because they cannot get a Student Loan—simply because of their religion”.

I could not agree more with the Prime Minister, but he should remember that it was his Government who created this situation. Unless he acts quickly, it will be his Government who failed to resolve it.

Future of Town Centres and High Streets

Debate between Bob Stewart and Simon Danczuk

Tuesday 17th January 2012 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

I congratulate the Backbench Business Committee and the hon. Member for Nuneaton (Mr Jones) on securing this important debate. The state of our high streets and town centres is important not only for our local economies and for providing jobs, but for strengthening our local communities. I think that setting up the Portas review of the high street was an inspired decision by the Government, although Members will not be surprised to hear that I have concerns about how the Government are supporting the retail sector.

Retail is our country’s largest private sector employer and accounts for 20% of the UK’s gross domestic product. The sector accounts for 40% of employment for the under-20s and pays 28% of all business rates. Now that the Government have achieved a youth unemployment level of over 1 million and failed to replace the public sector jobs that have been cut with private sector jobs, we can see how important the sector is to the health of our economy.

The retail sector’s prospects for 2012 are not good. Hardly a day goes by without another high street brand going into administration; Peacocks has already been mentioned. Consumer confidence is exceptionally low. Although that is clearly impacting on the larger retail multiples, it is also having a devastating impact on independent retailers, a group of businesses that do not always have a voice—or rather, are not always heard—in debates about the economy. That is why I believe that commissioning the Portas review was an inspired decision. It inevitably shines light on the smaller retailers that provide the diversity and quality customer service that enhance our high streets.

There has been much press coverage of Rochdale’s town centre in recent months, not least because McDonald’s has decided to leave, and because we have a disproportionate number of charity shops. In reality, however, our town has a great retail offer. Businesses such as Chantilly, 25 Ten, Denis Hope, Bragg and the Number Ten Gallery are perfect examples of the high-quality independents that enhance Rochdale’s high street, but Rochdale, like towns throughout the country, needs the Government to act more quickly and responsibly.

[Bob Stewart (Beckenham) (Con)]

It is terribly important to point out that the issue is not just about retail, but about attracting people into town centres. Beckenham used to be a wonderful place to go, but it is getting shoddier and shoddier, and we need more funding to make such areas good places for people to go—even if they are going there not to spend any money, but just for social reasons.

[Simon Danczuk]

I agree, and the Portas review makes the point that town centres are not just about retail, but about being a community magnet that brings people in for a variety of reasons. One problem is that the Portas review was delayed for months, and came to us late, but it is also disappointing that the Minister has decided not to respond until the spring.

The review makes a host of recommendations, practically all of which I welcome, but it also pushes a disproportionate amount of responsibility on to local government. We all know that towns such as Rochdale have received devastating cuts from this Government, so it will not be easy for local authorities to implement some of the recommendations, such as discounted business rates. Local councils can help with national market day, and set up town teams, as Members have said, but it is for central Government to take responsibility for the major issues affecting our town centres.

On planning, as the review recommends, the Government must put the town centre first, and following their consultation on the national planning policy framework, I get the impression that they will. I believe that they will make that change to the draft NPPF.

But the Government need to go further than the review, and we would benefit from looking at how credit insurance works in the retail sector, and at how the lack of credit insurance for wholesalers and suppliers makes it difficult for businesses to manage cash flow and, ultimately, to survive. A Government scheme to assist suppliers with credit insurance would certainly help.

The review makes some welcome recommendations on business rates, and Mary Portas is right to highlight the adverse impact of business rate levels on our high streets. In Rochdale, retailers that are closing have cited high business rates, but the Government have just introduced the biggest hike in such rates for 20 years—an increase of 5.6%. That is just not sustainable for small businesses on our high street.