Student Tuition Fees and Maintenance Loans

Baroness Kramer Excerpts

Tuesday 18th December 2018 Lords Chamber

[Lord Bates]

It is not correct to say that student loans are not on the Government’s books. Of course, the national debt does take into account the full cost of student loans—they are listed there. The question at issue, which was addressed by the ONS, was whether the repayment rates should be reflected in the deficit—the total is in the debt but not in the deficit—and it came down on the side of believing that that ought to be recognised in the year in which the loan takes place, rather than waiting until the end of 30 years to figure that out.

We do not mark our own homework on this. We follow the existing rules, as all Governments have done. The ONS has offered a view and made a recommendation, and we will follow that through.

[Baroness Kramer (LD)]

My Lords, what most worries me is the distortion in decision-making that results in this silly game-playing with accounting standards. We saw it with PFI and with Network Rail and now, there is a great fear around the House that the student loan programme might be curtailed to improve the cosmetics of the deficit. Will the Government finally simply overhaul the way they handle the public accounts so that they are genuinely clear and transparent? The financial markets that are supposed to be most fooled by this managing of the deficit number simply deconstruct it so that they can see the underlying reality, so there is nothing to be gained except PR—and the danger of distorted decision-making.

[Lord Bates]

We accept the ONS’s rules. The rules that she criticises are the same as those that were in place during the coalition years. People have pointed this out, and there is a debate about whether it is correct to book a loss that might or might not occur in 30 years in the year in which the loan is made. That is a reasonable debate to have. We do not make the decision; the ONS does. It has decided and we will follow it.