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An odd footnote in the Spending Round

June 27, 2013

Buried away in Footnote 5 to Table A1 on page 59 of the Appendix to Osborne’s Spending Round, is the following statement:

Figures for [the Department of Business, Innovation and Skills] include the Resource and Budgeting charge for student loans, which is £2.9 billion in 2014-15 and £4.4 billion in 2015-16.

The ‘resource and budgeting’ charge is better known as the estimated loss on student loans recorded in accounts at time of issue. This year-on-year increase is so large that BIS’s overall expenditure budget actually increases from £17billion to £17.7bn.

You won’t see much trumpeting of this figure though since it undermines the claims to be putting HE finances on a ‘firm financial footing’.

Something else is a little rum too.

Neither of those figures is what was given to parliament in 2012: the estimated write-off for 2014/15 was then thought to be £3.3billion rising to £3.7bn in 2015/16 as annual tuition fee loans rise. (See p. 7 here )

So in the Spending Round footnote, one number looks too low and the other too high. And what should be a year-on-year increase of about £400million has turned into one of  £1.5bn.

What might be going on here?

I can only guess, but perhaps the upwards revisions to write-offs that we have seen in recent months are being recorded in 2015/16 – postponed and thus inflating that figure – in order to improve the figures for 2014/15, when there’s an election to be fought.

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