The dog that hasn’t barked …

Why haven’t we yet had a ‘ministerial decision’ regarding the planned sale of student loans?

It’s October 1st and the first tranche of sale proceeds, roughly £2.5 billion, is scheduled to arrive by the end of this financial year: in March 2016.

That tranche is in the official and OBR projections along with four other equal amounts over the next five years; generating cash receipts of £11.5billion and helping George Osborne hit part of his fiscal mandate: to have public debt falling as a share of GDP by March.

A formal announcement was expected around the Summer Budget as the civil servant responsible has nine months to achieve the first sale once the green light comes from Sajid Javid.

I wrote to BIS in July asking about a potential delay and was told by a spokesperson:

“Subject to value for money, the Government expects to sell the first tranche of the pre-Browne income contingent repayment student loan book by the end of 2015-16.  Further public announcements will be made in due course.”

I went back again today – two months later – and it was confirmed to me that there was still no update.

OK. So not much of a story.

Except that these issues of cashflow and debt may shed light on why Javid is said to prefer a 40% cut to BIS’s budget in November’s Spending Review as opposed to a 25% one, with all that entails for research and the shape of the sector.

Especially as the changes to student finance for 2016/17 starters are likely to increase the cash outlay in the short to medium term (net cash requirement drives the change in public debt). This is because the new maintenance loans issued each year will be large than the level of grants.

By considering these potential changes to projected loan cashflows, we may better understand the pressures on other parts of BIS’s spending budgets.

Table courtesy of the Office for Budgetary Responsibility
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