Sharia-compliant Student Finance

Lord Watson of Invergowrie Excerpts

Thursday 25th July 2019 Lords Chamber

[Viscount Younger of Leckie]

There is a process in place. I know that the noble Lord, Lord Sharkey, has expressed frustration about its progress, as has the noble Baroness. These changes were mooted in 2012, and there was a consultation in April 2014 and the Government published their response. We then enabled the process to go through Parliament through the Higher Education and Research Act 2017. This is a complex process and it requires time to get it right.

[Lord Watson of Invergowrie (Lab)]

My Lords, the Minister has just given us what can best be described as obfuscation. This is a sorry tale dating back, as the noble Lord, Lord Sharkey, said, to 2013, when Prime Minister Cameron spoke to the World Islamic Economic Forum and promised a sharia-compliant student loan scheme:

“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”.


The Government’s chosen vehicle was the Higher Education and Research Act 2017, which the Minister himself guided through your Lordships’ House. At no point did he rebut the view given to those of us involved in that legislation that an Islamic-compliant scheme could be in place within a year, given the political will. There have now been six years and three Prime Ministers since that commitment was given to the Muslim community. The Minister says—and I believe him—that he is very keen to increase diversity in our universities, so how can he justify the foot-dragging that is causing precisely the opposite?

[Viscount Younger of Leckie]

I certainly do not call it foot-dragging. We would be the first Government to introduce a system of student finance compatible with Islamic finance principles; that is a good start. To give a little more detail on the complexities, we have identified and have been considering a range of issues which include, among others, accounting for the new arrangements, the degree of legal separation required, the treatment of cash flows, the nature of the commitments that a student will make under the new system and the method for establishing equivalence of outcome.