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| Version 1 | Version 2 |
|---|---|
| Student loan change adds £12bn to deficit | Student loan change adds £12bn to deficit |
| (35 minutes later) | |
| A change in how student loans are recorded in the public finances will add £12bn to the deficit, after a ruling by the Office for National Statistics. | A change in how student loans are recorded in the public finances will add £12bn to the deficit, after a ruling by the Office for National Statistics. |
| The amount expected not to be repaid, which could be 45% of lending, will now be reported as public spending. | The amount expected not to be repaid, which could be 45% of lending, will now be reported as public spending. |
| Student lending will now significantly push up the deficit - providing an incentive to cut tuition fees. | |
| It will end what has been called a "financial illusion" in student fees. | It will end what has been called a "financial illusion" in student fees. |
| The decision by the statistics agency tackles an anomaly in which the cost of lending to students has been missing from the public finances - allowing lending to rise to cover higher fees without any apparent increase in the deficit. | The decision by the statistics agency tackles an anomaly in which the cost of lending to students has been missing from the public finances - allowing lending to rise to cover higher fees without any apparent increase in the deficit. |
| Nick Hillman, director of the Higher Education Policy Institute, said this "180-degree flip" will seem "embarrassing for policymakers". | |
| But he warned it could mean less funding for students and universities as they "suddenly look much more costly to current taxpayers". | |
| High fees, high deficit | High fees, high deficit |
| Approaching half of student lending is expected to be written off - and this will now have to be reclassified as spending, which the ONS says will push up the deficit by an anticipated £12bn. | Approaching half of student lending is expected to be written off - and this will now have to be reclassified as spending, which the ONS says will push up the deficit by an anticipated £12bn. |
| This technical change could have major implications for the current review of university finance in England - which is considering whether to cut fees from £9,250 per year. | This technical change could have major implications for the current review of university finance in England - which is considering whether to cut fees from £9,250 per year. |
| Higher levels of tuition fees require higher levels of lending - which will now show up as billions more on the deficit. | Higher levels of tuition fees require higher levels of lending - which will now show up as billions more on the deficit. |
| This will provide an incentive for the government to reduce the level of tuition fees, allowing them to limit the negative impact on the deficit. | |
| The change applies to loans to students across the UK, but most of this will be accounted for by lending to students in England. | The change applies to loans to students across the UK, but most of this will be accounted for by lending to students in England. |
| Much of university funding in England is now through tuition fees - and if fees were cut there would be questions about whether there would be a return to more direct funding. | Much of university funding in England is now through tuition fees - and if fees were cut there would be questions about whether there would be a return to more direct funding. |
| Alistair Jervis, chief executive of Universities UK, warned against "knee-jerk reactions" to the ONS ruling which could cut spending on students or limit student numbers. | |
| "It is essential that universities are properly and sustainably funded to ensure students receive the high quality university experience they rightly expect," he said. |