Student Loan Books

Lord Addington Excerpts

Thursday 11th October 2018 Lords Chamber

[Viscount Younger of Leckie]

I do not agree with the assessment of my noble friend. The figure I have from the OBR is not £28.1 billion but £23 billion. Whatever the figure, a lot of money has been put down. The forecast from the OBR is based on a nominal undiscounted cash projection, and this implies that the £28.1 billion received 30 years from now—or the £23 billion; whichever we agree upon—has the same value as £28.1 billion today, which is not the case. We have to account for inflation. Similarly, the lack of discounting means that none of the risk or uncertainty associated with those cash flows has been captured in the £28.1 billion. We have to discount for the riskiness of the asset. It is a complex issue, which my noble friend will know.

[Lord Addington (LD)]

My Lords, is it not clear that the current system is actually costing us quite a lot of money? That seems to be the one thing that is clear. Will the Minister give us some assurance that, if we are looking at this in the future, and are going to discount this money eventually, we might give a slightly more beneficial settlement to current students?

[Viscount Younger of Leckie]

Part of the rationale for looking at a sale now is because market conditions are considered to be right. The money is certain money which comes to the Treasury and can then be used to better effect in other areas, which, as I said earlier, is up to the Treasury to decide.