Ons Decisions: Student Loans

Part of the debate – in the House of Commons at 12:41 pm on 18th December 2018.

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Photo of Wes Streeting Wes Streeting Labour, Ilford North 12:41 pm, 18th December 2018

I thank the Chief Secretary for that reply.

The Treasury Committee welcomes the ONS decision, which is in line with our recommendations, but this is more than a little embarrassing for the Government. The OBR estimates that yesterday’s decision adds £12 billion to the deficit, but even the OBR’s method of calculating the sum does not appear entirely consistent with the ONS decision. Can the Chief Secretary therefore tell us what the right figure is, or has the Government’s creative accounting become so creative that it has left even the Chief Secretary bamboozled?

Can the Chief Secretary at least tell us what the fiscal impact will be? Will there be any impact on departmental budgets or on the devolved nations? What does it mean for the Government’s predisposition for selling the student loan book for a song? Does that policy still make sense? Indeed, did it ever make any sense? Vice-Chancellors are understandably worried that yesterday’s decision will lead to a reduction in funding available to our universities.

Given that the Chief Secretary says this is effectively a matter of accounting, rather than cash flows, does she agree with Paul Johnson at the Institute for Fiscal Studies that

IF it was right to aim for zero deficit on old definition THEN it is right to aim for £17bn deficit on new definition”?

Will she confirm that the Government will now revise their fiscal targets in the spring statement, or does she expect students and universities to pay the price for the Government’s accounting trickery and meaningless fiscal targets? Only a matter of weeks ago at the autumn Budget, the Chancellor boasted,

“Fiscal Phil says, ‘Fiscal Rules OK’”—[Official Report, 29 October 2018;
Vol. 648, c. 655.]

He looks a bit silly now, doesn’t he?

Where does this leave the Augar review on post-18 education? Can the Chief Secretary assure the House today that the Augar review will focus on further and higher education policy aims first and foremost, and not on how to design a student loans system that is attractive due to its accounting features?

The ONS decision yesterday makes the case for real reform of our higher education system more compelling. Instead of tinkering around the edges, flirting with cuts in fees that would benefit the richest graduates and cuts in places that would only hurt the poorest students, is it not time for real reform: a system that is publicly funded and genuinely free at the point of use?