My Lords, I am in favour of the amendments tabled by the noble Lord, Lord Sharkey. I declare my interest as co-chair of the All-Party Parliamentary Group on Islamic Finance. The APPG has recently reformed and is now an active body. I am also a volunteer patron of the Islamic Finance Council. I have long-standing experience of financial services and a strong connection with the City of London. I have promoted Islamic finance and attended numerous conferences in this country and abroad. I also used to be a visiting lecturer at various colleges and thus have a deep interest in the education and well-being of students.
Sharia-compliant student finance is one of many issues that fall within the scope of Islamic finance. The United Kingdom has the largest Islamic finance market outside the Muslim world. Its assets now exceed $20 billion. Worldwide, the Islamic finance sector is now valued at more than $2 trillion, with an annual growth rate of over 15%. We have in this country very competent accountants, solicitors, consultants and other professionals who can help foreign countries develop their Islamic financial structures. I have made this point twice in your Lordships’ House recently, including in the debate tabled by the noble Viscount, Lord Waverley, on the subject only last week. It is, however, incumbent on the UK to look at its own structures and address deficiencies wherever they may arise. Otherwise we will not be seen as a model for others to follow.
This brings me to the matter at hand. In 2013, the UK hosted the ninth World Islamic Economic Forum. It was the first time that the forum had been held outside the Islamic world, for which the UK drew great praise and admiration. The former Prime Minister, David Cameron, spoke at the forum and stated that he would like London to be a great capital of Islamic finance in the western world. He made the further point that London proudly possesses the virtues of openness and innovation. Indeed, we need to be innovative to be a market leader in Islamic finance.
At the conference, Mr Cameron made three commitments on behalf of the Government: to issue a sovereign sukuk for around £200 million, to provide a sharia-compliant student loan scheme, and to arrange start-up loans for new businesses based on sharia principles. In the light of the first commitment, a sukuk for £200 million was issued. It was very successful and was oversubscribed by 10 times. It is important that we now deliver the second commitment: the arrangement of a sharia-compliant student loan.
It is four years since the commitment was made, so it is most overdue. David Cameron 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”.
The Government continued to illustrate their commitment to this. In 2014, the Department for Business, Innovation and Skills held a consultation on sharia-compliant student financing. In their response, the Government stated that they acknowledged its importance and supported the introduction of such a scheme. It is important that we now push ahead and make it available to students as soon as possible.
Increasingly, I find that many young Muslims wish to reconnect with their Islamic principles. With there being more than 300,000 full-time Muslim students today, it seems clear that this wish remains unfulfilled for some students without a sharia-compliant student finance scheme. The diversity of modern Britain must be reflected in all spheres of life in order to integrate the next generation of Muslims and other minorities with the rest of the population.
For the past four years, I have been asked by the high commissioner for Bangladesh to present awards to British Bangladeshi school leavers. The performance of these children has improved dramatically in recent years and this community is now performing exceptionally well at school. More of these children now wish to move on to higher education, thus increasing the number of Muslim students at our universities.
Today, funding a degree in the UK requires significant expenditure. Tuition fees combined with living expenses mean costs of at least £22,000 a year for the average student. Of course, studying in London will undoubtedly cost more. A student loan is therefore the only route to education for many people.
Let us be frank: a bright, young potential Muslim student may be forced to make an unfair choice—forgo their principles or opt out of going to university altogether. The lack of sharia-compliant loans therefore has a direct impact on the potentially life-changing decision for parents and potential students whether to continue into higher education. They simply do not want to get involved in interest-based loans that go against their faith-based principles. This can have wider implications. For example, as someone who has been involved in combating radicalisation, it is clear to me that education is a key tool to better integrate our communities and further enhance social cohesion.
I welcome the Government’s commitment to ensure our world-class higher education sector remains financially sustainable, with an ability to invest in the excellent teaching that students expect. However, we must also give all young people, irrespective of their religious belief or racial origins, the opportunities to succeed and to study. By doing so we will encourage all communities to take an effective role in the advancement and well-being of our country. We want religious minority groups to be given the same chances as others so that they become valuable members of our society.
I add that sharia-compliant financing appeals beyond the Muslim community to those who simply desire a more ethical form of financing. In my experience, a number of non-Muslims have opted to take up Islamic financial products as a matter of principle. I have received letters and emails from leading Muslim organisations and community leaders who would like the Government to introduce sharia-compliant student finance arrangements. These letters have been received from the Muslim Council of Britain, the Muslim Association of Britain, the East London Mosque & London Muslim Centre, the London Central Mosque Trust Ltd & the Islamic Cultural Centre, Muslim Engagement and Development, and from the honourable Jaffer Kapasi OBE. I have passed copies of this correspondence to my noble friend the Minister.
Additionally, I have received a letter from Mr Mohammed Amin MBE, who is currently the chairman of the Conservative Muslim Forum. He is a chartered accountant specialising in Islamic finance. Until his retirement, he was a partner and head of UK Islamic finance at PricewaterhouseCoopers. He is firmly of the view that it is possible for sharia-compliant arrangements for students to be introduced by autumn 2018. I also forwarded a copy of this letter to my noble friend the Minister.
While I fully support the development of a publicly available and regularly updated progress report as outlined in the amendments, I would prefer to get a commitment that a sharia-compliant student loan scheme will be available in the UK by autumn 2018. I very much appreciate that the Department for Education has opened a tender for consultants to bid to assist in the development of a sharia-compliant scheme for students. This tender was opened on 21 February and the closing date was 7 March 2017. While we welcome this step, we ask for a commitment that the scheme will be operational by autumn 2018. I and others are of the opinion that this is possible if there is a will to prioritise the project. On our side, we are very happy to provide any help and support that may be needed.