Government banks on £10bn sale of student loan book

Announcement comes as new details emerge about increased science capital budget

June 27, 2013

The government has confirmed plans to cut the national debt by selling student loans, while revealing more details of how increased science capital funding will be spent.

Danny Alexander, the chief secretary to the Treasury, told the House of Commons in a speech on infrastructure spending that the sale of pre-2012 income-contingent loans would raise £10 billion.

His statement on June came after the Guardian disclosed the contents of a government-commissioned report, carried out by investment bank Rothschild, into how to make the loan book more attractive to private buyers.

A Treasury document, titled “Investing in Britain’s future”, published after Mr Alexander’s speech, states that there is “an ambitious target for central government to deliver at least £15 billion of asset sales between 2015 and 2020”.

This will “comprise at least £5 billion of land and property to support growth and drive efficiency, and at least £10 billion of corporate and financial assets, which will

contribute to the government’s aim to reduce public sector net debt, including proceeds from the pre-Browne Income Contingent Repayment student loan book”.

The Rothschild report on how to make the loans more attractive to private buyers contained options for the government including raising interest rates – and thus repayments – for existing graduates who took out loans over the last 15 years, or underwriting the loans with a “synthetic hedge”, which would see the government compensating any buyer of the loan book against the risk of lower than expected returns.

Vince Cable, the Lib Dem business secretary, has ruled out the option of increasing interest rates for existing graduates, but has not ruled out the “synthetic hedge”.

Meanwhile, the supporting document to Mr Alexander’s speech reveals a few extra details on how the increased science capital budget will be spent, in addition to those announced by the chancellor George Osborne.

The £1.1 billion budget, which will rise with inflation until the end of the decade, will be used to deliver “further world-leading research facilities, supporting UK capabilities” in the “Eight Great Technologies” announced earlier this year.

This will involve a national network of “Big Data” institutes; “major upgrades and new facilities” at the Harwell Science and Innovation Campus in Oxfordshire; a polar satellite communication system; and “major investment” in autonomous robotics.

The Treasury document also commits to “providing higher education institutions with infrastructure capital to ensure they have access to the latest capabilities”.

“As part of this commitment, the Department of Health will provide £150 million in 2015-16 to fund health research infrastructure in the areas of dementia, genomics and imaging,” it adds.

It also commits to providing “a balance of continued support for basic, curiosity-driven research with more directed support in pursuit of specific challenges.”

You've reached your article limit.

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Have your say

Log in or register to post comments

Featured Jobs

Assistant Recruitment - Human Resources Office

University Of Nottingham Ningbo China

Outreach Officer

Gsm London

Professorship in Geomatics

Norwegian University Of Science & Technology -ntnu

Professor of European History

Newcastle University

Head of Department

University Of Chichester
See all jobs

Most Commented

men in office with feet on desk. Vintage

Three-quarters of respondents are dissatisfied with the people running their institutions

Mitch Blunt illustration (23 March 2017)

Without more conservative perspectives in the academy, lawmakers will increasingly ignore and potentially defund social science, says Musa al-Gharbi

students use laptops

Researchers say students who use computers score half a grade lower than those who write notes

Canal houses, Amsterdam, Netherlands

All three of England’s for-profit universities owned in Netherlands

sitting by statue

Institutions told they have a ‘culture of excluding postgraduates’ in wake of damning study