Student Loan Books

Lord Watson of Invergowrie Excerpts

Thursday 11th October 2018 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I thank the Minister for repeating the Statement. I have to say, it contains rather less detail than the announcement headed “Government Asset Sale” that appeared on the website yesterday evening.

I listened to Mr Gyimah’s exchange today with my colleague Angela Rayner, the shadow Secretary of State. Unfortunately, he dodged all of her questions on the valuation of the loans the Government are selling. He simply confirmed that the Government would forgo the 25-year revenue stream in favour of a one-off receipt. I hope that the Minister will be more forthcoming. Will he tell noble Lords whether the Government have identified a minimum amount to be raised—that is, an amount at which they will decide that the sale would simply not be financially viable? Previously, the Government have said that they will raise £12 billion by selling off these loans, but will the Minister tell us the total value of the loans that will need to be sold to achieve this? Will he also explain how the apparently random figure of £12 billion was calculated? Mr Gyimah said that he would share the range of estimates with Back-Bench Members in another place. Is the Minister in a position to confirm that this information will also be shared with Members of your Lordships’ House?

The Government have said that the revenue from selling off student loans now will enable them to invest in vital public services today. We all know that the Treasury has the final say on specifically where this windfall will go, but surely most, if not all, of it should be reinvested in the education budget; goodness knows there is a need for it.

I will mention just two areas. First, the schools budget is in such a dire state that last week, 2,000 head teachers—yes, head teachers, no less—demonstrated outside 10 Downing Street to highlight their predicament. As we heard in Oral Questions today, that led to the Schools Minister issuing misleading statistics to cover up the true position on schools funding. Secondly, further education has suffered dreadfully over the past two decades, losing more funding than any other education sector. Next week, we will see a lobby on Parliament by colleges and their staff in an attempt to highlight and begin to redress the funding cuts they have endured. Those are just two areas of education in vital need of additional funding. The £12 billion that the Government say they will raise would go a long way to filling those gaps. What effort will the Minister and his colleagues make to ensure that a major chunk of the proceeds from the second sale of the student loan book will return to the education budget?

[Viscount Younger of Leckie]

I thank the noble Lord for his questions. The detail in the WMS that we issued yesterday was pretty comprehensive, but perhaps I can help the noble Lord by adding a few things.

Yesterday, we announced the start of the process for the second of these sales. It relates to the selection of loans that became eligible for repayment between 2007 and 2009. They have a face value of £3.9 billion but, for commercial reasons, we cannot disclose what the Government think the retention value is, particularly as we are pursuing this programme of sales. I am sure that the noble Lord will understand. He will know that the Government received cash proceeds of £1.7 billion from the first sale of the student loans and the reduction in the PSND.

Another question the noble Lord raised concerned the proceeds that will be received by the Treasury. Yes, they go to the Treasury and it is up to the Treasury to decide how to spend them. I cannot confirm whether those funds will go to the DfE.