Student loan sale – no reference in the 2014/15 accounts

There was no reference to the planned sale of ‘pre-2012′ student loans in the 2014/15 accounts published by BIS on Tuesday.

Even standard clauses that had appeared in previous years were absent. For example, in the 2013/14 edition we had the following:

The Government is continuing to assess how best to manage its holding of current and future loans, and has made public its intention to realise value for the taxpayer through sales of pre-HE Reform income contingent loans. These Accounts present the current student loans portfolio valued on the basis that it will continue to be held by the Core Department until such time as a decision to sell the asset has been made.

Nothing of the kind.

This may prove to be insignificant, but the Budget also failed to confirm that a sale was going ahead. And the Chancellor’s speech to the CBI back in May failed to contain a mention, despite the press having been briefed to expect it.

The OBR indicates that the first sale (of five) is expected in 2015/16, but also suggests that BIS has revised its approach very recently:

At Autumn Statement 2013, the Government announced its 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 Budget 2015. The Government informed us at the time that the sale in 2015-16 remains its firm intention, but that there had 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 £12 billion central estimate for the proceeds from the sale. The Government has confirmed to us that it intends to proceed on that basis. (my emphasis)
Fiscial Sustainability Report, June 2015, paragraph 3.75

A sale has been policy for the last four years and plans have already gone through different forms. Our best understanding at present is that the government plans to sell whole loan ‘cohorts’ starting with those borrowers with outstanding loan balances who graduated in 2001 to 2004.

BIS’s ‘Critical Business Models’ published today mentions a specific model that simulates ‘student loan borrowers in [payment cohorts] 2002-2005 that meet the criteria for inclusion in the loan sale’. The latest information on these accounts is that the face value of the outstanding balances is just under £5billion. The government hopes to raise £11.5bn over the course of parliament from loan sales. The government would probably be happy to raise £2-3bn from the cohorts specified above.

I have ask the BIS press office on Thursday morning for comment on the absence of loan sale discussion from the accounts, but haven’t had a reply.