Education Bill

My Lords, I understand noble Lords’ desire to ensure parity between the rate of interest charged to students and that which is borne by the Government. However, I would be reluctant to introduce the stringent cut suggested by the noble Lord. Let me first respond to why RPI and not CPI. We have always taken the view that there is no single measure of inflation that is appropriate for all purposes, but the RPI is commonly used in private contracts for uprating of living costs, payments and housing rents, so it is more appropriate than CPI for student loan interest as it takes account of, among other things, changes in mortgage interest and council tax—typical expenses for graduates that are not included in the calculation of the CPI. Historically, RPI has always been used for calculating interest on student loans. This means that over a period of years the rate of interest on student loans has been consistently applied on a widely recognised and adopted measure of inflation.