UK slowly progressing towards providing Shariah compliant student finance

The UK Government has been thinking about the possibility of introducing Shariah compliant student finance since 2011.

I gave some of the historical background on my page "Avoiding apathy requires realism" which emphasised how long achieving change can take. This year the Government took another step forward, by enacting the primary legislation (an act of Parliament) to give itself the legal power to offer Shariah compliant student loans.

Letter from Amin April 2017 - Shariah compliant student finance inches closer in the UK

Almost a year ago, my June 2016 column illustrated long achieving change can take with the struggle to achieve a Government operated scheme of Shariah compliant student finance in the UK. I mentioned that discussions had been held with the Government as far back as 2011. The efforts had culminated in the Government some five years later [May 2016] publishing a White Paper stating “We plan to legislate for the Secretary of State to offer an alternative [Shariah compliant] student finance product alongside his current powers to offer grants and loans.”

I cautioned readers: “However, given the need for legislation, the earliest I would expect students to be able to access such financing is September 2017.” This caution was realistic, but I was not realistic enough!

The good news is that the Government is following through with its promise to legislate. The Higher Education and Research Bill is currently before Parliament. Clause 82 confers certain powers on the Secretary of State for Education. When the clause is read by someone familiar with the statutory language used for Islamic finance in the UK, it is clear that this clause confers the long-promised power to implement a Shariah compliant student finance system.

The bad news is that the Bill does not require the Secretary of State to implement such a system. Of itself, that is not a problem, as the Government has committed itself to doing so. More seriously, the Bill contains no time-scale for when a Shariah compliant system is likely to be in place.

When the Bill was reviewed in committee in the House of Lords, Lord Sharkey proposed an amendment to give a deadline of the 2018-2019 academic year for the introduction of such a scheme, which the Government rejected. In the full House of Lords debate on 13 March 2017 (which can be read on the Hansard website) Lord Sharkey instead proposed an amendment requiring quarterly progress reports from the Secretary of State.

This amendment was supported by a number of peers. In particular, Lord Sheikh referred to the writer in his speech:

Lord Sharkey’s amendment was pressed to a vote, and only lost narrowly, by 227-225. This is a creditable result, given that it was opposed by the weight of the Government.

The final outcome is that the Bill will proceed forwards, and once it has completed all of its Parliamentary stages and received the Royal Assent, the Secretary of State for Education will have the power to implement a Shariah compliant student finance system.

While there is no deadline, and (due to the amendment being defeated) no requirement for regular progress reports, peers will still be able to ask the Secretary of State about progress. I hope they do so regularly, and have not given up on implementation by autumn 2018.

Legislative position

Since my Letter from Amin was written, Parliament has voted for a general election and has since been dissolved. However the Higher Education and Research Bill received royal assent on 27 April, and is now the Higher Education and Research Act 2017. However the Government website has not been updated with the final text of the bill.

However Clause 82 from the Bill should be virtually unchanged in the Act. I will update the linked document with section 82 from the Act when available. This is the provision that enables the Government to offer Shariah compliant student finance.

The planned structure