Sale of Student loans – ‘progress continues’ (Budget 2015)
The 2015 Budget indicates that ‘progress continues’ on attempts to sell the student loans that were issued to those starting before 2012 (‘pre-2012 loans’). Despite Vince Cable vetoing a sale last summer, it remains government policy. How we interpret ‘government’ – Treasury or Tory – there might be clearer after the Lib Dems get to set out their alternative budget tomorrow.
In the meantime here’s a relevant paragraph from the Office for Budgetary Responsibility’s new Economic & Fiscal Outlook.
At Autumn Statement 2013, the Government announced the intention to sell part of the student loan book, which it expected would raise around £12 billion over five years from 2015-16. This intention was reiterated in Autumn Statement 2014 and has been again in this Budget. The Government has informed us that the sale in 2015-16 remains its firm intention, but that there have been changes in the form of the expected sale relative to that which underpinned our previous forecast assumptions. While the preparations for the sale are still at an early stage and significant uncertainties remain, one implication is that it is likely that a larger quantity of loans would need to be sold to meet the Government’s £12billion central estimate for the proceeds from the sale. The Government has confirmed to us that it intends to proceed on that basis. We have therefore kept the £12 billion over five years in our latest forecast, but have revised up the extent to which future repayments and interest paid to the Exchequer will be reduced. Other things equal, these changes reduce repayments by around £¼ billion on top of the almost £1¼ billion by 2019-20 that had already been factored into our forecast. (paragraph 4.162)
The £2.3bn cash estimated to be raised in 2015/16 would help Osborne’s claim that public debt would be falling as a share of GDP by 2015/16.
There is no indication as yet as to what the new form of sale might be. For my take on efforts so far, see ‘Cash Today’ in the London Review of Books.