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.”