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Sale of Student Loans Bill

This group of amendments deals with the process by which the Government may give undertakings concerning amendments to regulations, with how the Government will report on each sale and with how information about borrowers will be handled. Let me start by being explicitly clear about the value-for-money framework. Throughout the proceedings on the Bill, we have made it clear that the sales would not take place unless we could demonstrate value for money. The Government have published forecasts of anticipated receipts of some £6.3 billion from the proposed sales programme over the comprehensive spending review period. However, the key point is that the amounts are forecasts rather than commitments. The Government are committed to the student loans sale programme, but only if any sale represents good value for money. That should be a significant reassurance. I turn specifically to amendments Nos. 2, 3 and 15, which are about undertakings. They respond to expert advice that we have received from our sales arranger, Deutsche bank, which was engaged after Report and Third Reading in the House. For us to achieve good value for money on behalf of the taxpayer, potential purchasers must understand what is being sold. Financial institutions can model the economic and credit risks that we wish to transfer away from the Government, but not the political risk of Ministers using their powers to change the conditions of repayment—and, consequently, predicted cash flows to the purchaser. If potential purchasers believed that the Government might alter an asset in an unpredictable way after selling it, that would seriously reduce what those purchasers would be prepared to pay. The Bill already provides the option of offering compensation if future policy changes compromise the value of the transferred asset. However, we have been advised that the Government might achieve better value for money if they could give undertakings about how regulations governing student loans may or may not change terms and conditions in future. The impact that a compensation mechanism may have on the size and timing of future cash flows may contain too much uncertainty for investors. Having the power to give undertakings also gives flexibility to cater for possible changes in the classification rules, which are currently being redrafted by EUROSTAT.