Happy New Year – a personal announcement

Happy New Year!

This blog has now been running for nearly nine years. In recent months, the output has slowed and I see that I haven’t done anything since September.

In the main, this is because work elsewhere is keeping from writing. I think that is likely to continue in the near future: I will mainly be producing private commissioned reports for UCU branches following the publication of the latest round of annual reports.

I will probably fire up this blog again in March for the budget and later that month, when I should be able to say more about a couple of new initiatives.

In the meantime, here is the latest odd development in the ongoing saga of Reading’s  National Institute for Research in Dairying Trust. The headline captures it: “Dead Radioactive Goats Experimented on Decades Ago Could be Buried in Berkshire”. More precisely, in Shinfield.

Proceeds from that sale of Shinfield land was subsequently passed on by the trust to the university. Reading’s latest accounts tell us that the matter of this multimillion pound loan from the trust to the university is still not resolved:

“”During the year, the University and one of its connected trusts, the National Institute for Research in Dairying Trust (NIRD), have been in discussions to resolve some legacy governance issues that were self-reported to OfS and the Charity Commission. These discussions are progressing well and are still ongoing. To date, they have not raised any issues that would have a material impact on the University. The University is the sole Trustee of NIRD, and NIRD is accounted for as part of the University group.”

At the national level, the announced change to the government’s fiscal rules makes it more likely that the programme of student loan sales will come to an end. The ONS announced that the two sales so far completed have lost £2.7billion and that this will now count as capital expenditure in the national accounts. 

Now that the government has decided to stop targeting Public Sector Net Debt as part of its fiscal mandate, the main aim of the loan sale loses much of its point. As explained here (and elsewhere) over the years, the fiscal illusion embedded in the composition of PSND (not changed by the ONS’s recent accounting overhaul) means that student loans are not counted as an asset in that headline figure. Any sale thereby improves PSND as the cash raised does count: PSND is reduced whatever loss is registered on the loans. What has changed is that the loss now scores as expenditure.

PSND is now sidelined and the losses on sales count as expenditure against the new secondary target of Public Sector Net Investment (3% of GDP per year). That would seem to mean that the sale programme performs badly against what are effectively the government’s chosen performance targets.

That PSNI target already has to accommodate the c. £10bn pa needed to fund estimated write-offs on new loans. For more detail on those impacts, seethe Office for Budget Responsibility’s restated March 2019 forecasts(from which the table below is taken).

Unlike in 2017 and 2018, there was no sale in December. The Budget would be the normal occasion on which the Chancellor would confirm whether or not they are still going ahead.

Now that the accounting more accurately reflects the impact of the decision to sell or not, you would expect reason to prevail and the scheme to be halted.