Ministers slammed after selling £3.5bn student loan book for just £1.7bn
Taxpayers were ripped off when the Government sold the £3.5bn student loans book for just half its value, a damning report has declared.
The rushed sale in an effort to reduce the public debt was “short-sighted” and the Treasury received “too little in return for what it gave up,” according to the Public Accounts Committee.
In February last year, ministers sold off a chunk of debt on taxpayer-backed student loans that had been issued before 2012. The face value of the loans book was £3.5bn.
But the Government got a return of just 48p in the pound for the sale, meaning it received just £1.7bn.
The cross-party committee said: “We did not expect government to recover the face value of the loans as repayments rely on people’s earnings, which means there is no realistic prospect of them all being repaid in full.
“But we do expect the Treasury and the Department for Education (DfE) to get the best possible deal on behalf of the taxpayer. In this case, government received too little in return for what it gave up.”
It added: “The government’s objective to reduce ‘public sector net debt’, as with previous asset sales, runs the risk of being prepared to sell at any price.”
Committee chair and Labour MP Meg Hillier said: “Government will need to learn quickly from the weaknesses of this sale if it is to secure the best deal for taxpayers in future…
“When public assets are gone, they’re gone - in the case of this first student loans sale, for too little return.”
A Government spokesperson said: “We are confident that we achieved value for money for taxpayers from the first sale of student loans.”,
They added: “We received more for the loans than the value to Government of retaining them, further strengthening the public finances.”