I got to put a question as part of yesterday’s Times Higher Education’s ‘election panel’.
Will the Department for Business, Innovation and Skills have to change the terms for existing borrowers of student loans to balance its budget after 2015? Does your party commit to protecting borrowers’ conditions?
Only two of the four party representatives offered an answer. Greg Clark replied:
The strength of our system is that it is robustly sustainable – as the OECD has confirmed – without any changes in terms being needed.
Now, that’s not a commitment to protecting borrower’s conditions after 2015, but it also sidesteps the issue. It’s a matter of record that the Treasury has set a ‘target’ for BIS to reduce the non-repayment rate on new loans to 36 per cent, from it’s current official figure of 45%.
Without dramatic changes in the graduate labour market, hitting that target in the next parliament would require a Conservative-led government to continue to freeze the maximum tuition fee for the majority of courses (controlling loan outlay) or to freeze the repayment threshold at £21000 in 2017 rather than uprate it in line with earnings (as was originally promised) and thus increasing repayments. And that’s before we consider the overall level of unspecified cuts proposed by David Cameron and George Osborne. Higher Education sits in a department which only benefits from a cash ringfence on research funding.
The OECD comments have become a crutch for Clark, but the official reports from that body have only examined what was in place before 2012. And they haven’t paid any attention to what’s going on in the BIS departmental accounting and budgeting.