Sharia-compliant Student Finance

Viscount Younger of Leckie Excerpts

Thursday 25th July 2019 Lords Chamber

[Lord Sharkey]

To ask Her Majesty’s Government what progress is being made towards the introduction of Sharia-compliant student finance.

[Viscount Younger of Leckie (Con)]

My Lords, the Government remain committed to introducing a system of alternative student finance, known as ASF, compatible with the principles of Islamic finance. We have received advice from the specialist consultants we appointed and will set out plans for implementation as we conclude the post-18 review at the spending review. This will ensure that students in receipt of an ASF package are not disadvantaged compared with other students in receipt of mainstream student support.

[Lord Sharkey (LD)]

That Answer is still vague and still qualified. Why can the Government not make a firm commitment? They have known about this problem since 2013 and have known about the solution since 2014. Every year since then, and again this September, Muslim students will have been disadvantaged. The noble Lord, Lord Young, told the House on 13 March 2017 that the Government were currently working towards a scheme being open to applications within this Parliament, which, then, was due to end in 2020. Can the Minister give the House a firm assurance that the new scheme will in fact be available for the 2021 academic year?

[Viscount Younger of Leckie]

I cannot give the noble Lord a firm assurance on that, but I can say that we continue to work through the complex range of policy, legal and system issues that will need to be resolved in order to develop and eventually launch an ASF product. We should not underestimate the scale of complexity here. We are trying to replicate a system of student finance that delivers the same results as now, whereby students do not receive any advantage nor suffer any disadvantage through applying for ASF.

[Baroness Nicholson of Winterbourne (Con)]

Will the Minister assure your Lordships that this new Government will do everything possible to open the gates as widely as possible to students from all over the world? As noble Lords know, I am particularly keen that that should happen for students from Iraq, the Middle East and silk route countries. I would really welcome that endorsement. We need the students and they really love being here.

--- Later in debate ---

[Viscount Younger of Leckie]

My noble friend is right. We want everyone with the ability to benefit from higher education to be able to do so. Resolving this issue will therefore make a significant contribution to our widening participation agenda, ensuring that people from all faiths and backgrounds feel that there is support by removing financial barriers to access.

[Baroness Garden of Frognal (LD)]

My Lords, the Government were able to produce a sharia-compliant version of the Help to Buy scheme within six months from a standing start. So why, after six years so far, have they not produced a student finance scheme, which is obviously to the detriment of Muslim students?

[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.

[Lord Sheikh (Con)]

My Lords, I declare an interest: I co-chaired the All-Party Parliamentary Group on Islamic Finance. The UK has the largest Islamic finance market outside the Islamic world, yet the community tell me we are suffering because of lack of facilities for students. Does my noble friend agree that it is time we put into practice the commitment given by David Cameron in 2013 that Muslim students will not suffer as a result of their religion?

[Viscount Younger of Leckie]

My noble friend is right. We want to introduce this as soon as we possibly can; I have undertaken today to give an update at the spending review, which will be some time in the autumn. Around 40,000 Muslims are down to study in this country, but we do not know how many have been deterred from starting at university as a result of the delays in this process.

[Lord Newby (LD)]

My Lords, the Minister has twice linked any further statement on this sorry tale to the spending review. Can he explain to the House the relevance of the spending review given that, by his own admission, we are talking simply about the extension of existing provisions from which non-Muslim students can benefit and there are no new policy expenditure implications? Secondly, when might we expect the spending review?

[Viscount Younger of Leckie]

I have been pressed on that matter before and I am unable to give a date for the review. But on the tuition fees process and system, I have said that we will announce the results of the Augar review at the spending review and this, of course, is included in that. So, it makes sense to make the announcement when we are ready to do so and to give an update at that point.

[Lord Flight (Con)]

My Lords, might the delay result from it being too difficult to find a substitute for interest to match the two student loan models? If there is not something similar, it can be argued that one side or the other is benefiting more.

[Viscount Younger of Leckie]

It is helpful to hear that from my noble friend. It is a complex issue, but we have made progress. As I said earlier, we have legislated to make the introduction of the system possible but we need to work through these complex issues. There is no point rolling the system out when it is not fit for purpose.