Almost a year after his first attempt was torpedoed by Vince Cable, Chancellor George Osborne is having a second go at privatising 14 years’ worth of student loans.
The Daily Mail reports that Osborne is planning to raise a record £23 billion this year through the sale of public sector assets, chief among them the student loan book.
The loan book, estimated to be worth £12 billion, covers all student finance between 1998 and 2012. The buyer will have the right to collect on all the loans taken out during this period, a job currently done by The Student Loans Company.
Osborne first announced plans to sell the loan book in his 2013 Autumn Statement. The Chancellor had already sold a collection of pre-1998 student loans that year. Critics said Osborne has sold them on the cheap, as the basket of loans had a face value of £890 million but sold for just £160 million.
Plans to sell the 1998-2012 were highly unpopular with students, who organised protests up and down the country. One of the central concerns was that the interest rate cap on the loans, which limits the rate to the lower of RPI inflation or the Bank of England base rate plus 1%, could be lifted in order to make the loan book more attractive to private sector buyers — an idea proposed in a 2011 report by Rothschild investment bank.
Liberal Democrat Vince Cable, who was then Business Secretary in the Coalition, eventually scrapped the policy, reportedly without telling the Tories he was going to announce the u-turn.
But George Osborne now has a free hand, following the LibDem rout and surprise Conservative victory in the recent election. Vince Cable is no longer an MP, let alone a cabinet member.
While plans the sell-off the loan book haven’t officially been announced by the government — we won’t know for sure until July’s budget — it seems likely that Osborne will have a second crack given that the main obstacle to the plan has now been removed.