ONS Decisions: Student Loans

Peter Dowd Excerpts

Tuesday 18th December 2018 Commons Chamber

[Elizabeth Truss]

My right hon. Friend, the Chair of the Treasury Committee, is correct. Ultimately, this is about making sure that our independent bodies are giving us advice about how our public finances should be presented in order to give the best possible picture. That is completely independent from our decisions about what is best for students. The fact is that this decision does not affect cash flows; it affects the presentation of accounts. We should not conflate that with the very right and proper debates we are having about making sure that our students have a finance system that supports them.

[Peter Dowd (Bootle) (Lab)]

This is not creative accountancy; this is fantasy accounting from the Government. The shadow Chief Secretary talks about Labour’s policy—[Hon. Members: “You’re the shadow Chief Secretary.”] Well, that is not very far away. The Chief Secretary can try to make up Labour’s policies on the hoof. She might make her own up on the hoof, but she should not make up ours on the hoof.

The ONS announcement ends the fiscal illusion that kept student debt off the Government’s books. This is not technical, and it blows a potential £12 billion hole in the Chancellor’s spending plans. At the last Budget, the Institute for Fiscal Studies warned the Chancellor that he was gambling with the public finances, and it seems that he has lost the bet: a reckless Chancellor bluffing his way through Budgets in a desperate attempt to keep his party together while the country is led to ruin and uncertainty.

This change raises a number of serious questions that the Minister must now answer, and has not answered. First, what impact will the additional £12 billion have on the Treasury’s ability to meet the fiscal targets that the Government set out most recently? Or will it mean that the Government have to abandon their fiscal rules yet again, for the umpteenth time? Secondly, will the Chief Secretary guarantee—she has not yet—that students and universities will not be adversely affected by this change? Thirdly, can the Government guarantee that no cap on student numbers will be introduced?

Finally, does this not pose a major challenge to the entire system of student finance which the Government have not only maintained but exacerbated with a trebling of fees—a system that creates a mountain of debt, placed first on the backs of students and now on the Government’s books when students are unable to pay? Would it not be better to adopt Labour’s policy of free university education, as set out in our manifesto—a very popular manifesto—and grey book, which invests in the future of our country by investing in the future of our young people, rather than giving billions of pounds of tax cuts to large corporations?

[Elizabeth Truss]

I find it extraordinary that we are being lectured on debt by a party that wants to add half a trillion pounds to our national debt. As I said in my earlier answer, we would still meet our fiscal targets on both the debt and the deficit with the numbers that the ONS currently estimates, but it is very premature to have this discussion when the ONS has not given the detailed figures.

I am willing to respond to the hon. Gentleman’s question about whether we will give a guarantee that this will not affect students—absolutely we will. The Augar review is being conducted on the basis of what is best for students. The fact is that we have one of the best higher education systems in the world, of which we should be rightly proud. We have a record number of students attending university and a record number of students from low-income backgrounds attending university, thanks to our policy.

The hon. Gentleman has to answer this question: is it really right that people who do not go to university and generally earn lower sums of money should subsidise those who do go to university and go on to earn more in later life? We can see the result when that happens—it is what has happened in Scotland. Places end up getting rationed, and higher education ends up not getting enough income.