Labour hits out at 'irresponsible' Government over £12bn student loan book sale
Labour has branded the Government “financially irresponsible” after ministers began the process of selling off outstanding student loans to the private sector.
The loans in question were taken out between 2002 and 2006 and have a face value of approximately £4bn – though the price they attract is likely to be lower because not all borrowers will pay back the full amount.
Then-chancellor George Osborne first announced the plan to sell off the loan book in 2013, but it was put on hold after the Government judged it would not raise as much money as previously thought.
Philip Hammond resurrected the policy in last year’s Autumn Statement.
Today’s announcement marks the first step in the sale of all loans issued before 2012 – a process which the Government estimates will take four years and could bring in £12bn to the Exchequer.
David Gauke, the Chief Secretary to the Treasury, said the sale “makes sense for taxpayers” and would make “an important contribution in our work to repair the public finances”.
Universities Minister Jo Johnson added: “This Government is committed to bringing public finances under control, and returning the budget to balance.
“As part of this we will look to sell assets where value for money to the UK taxpayer is assured.
“This sale will have no impact on people with student loans and will only proceed once we are satisfied that it represents value for money for the taxpayer.”
But Shadow Universities Minister Gordon Marsden attacked the move, arguing that uncertainty about the impact of Brexit on the higher education sector meant their value would be lower.
“Selling a chunk of the student loan book now is financially irresponsible,” the Labour MP told PoliticsHome.
“Brexit issues are throwing up big concerns about future student numbers. Last week’s Ucas figures show all students’ applications to UK universities are down 5% since the Brexit vote. The impact of Brexit could well depress the sale price further.
“The fact the Government are attempting to sell off part of the student loan book despite this shows how financially insecure they are.”
He also questioned the Government’s assurances that the sell-off would not affect the terms of students’ repayments.
Mr Marsden added: “The minister claims the sale will have ‘no impact on people with student loans’ but given the way the Government changed the terms of the repayment threshold last year – causing extra charges for students, how can we have confidence in his statement?
"We need to have cast iron assurances on students’ rights if there’s a sale to a private provider.”