§ Mr. TimmsTo ask the Chancellor of the Exchequer if he will make a statement of the Government's policy on the student loan debt sale. [8407]
§ Mr. Gordon BrownThe overriding policy considerations that have determined the Government's approach to the student loan debt sale are as follows.
The Government is committed to the development of a wide range of public-private partnerships which involve a transfer of risk to the private sector. This sale will shift much of the default risk to the private sector who have much more experience in dealing with credit risks. The sales will enable the markets to establish a clearer understanding of student loans and could in future encourage financial institutions to play a more direct role in the provision of student support.
In addition, the Government was elected on the basis of a manifesto pledge to work within the spending plans already announced for the next two years. This, and our 608W other economic pledges on inflation and taxes, were designed to create the conditions for economic stability and a platform for sustained growth.
Going ahead with the student loan debt sale has a critical role in enabling us to keep this pledge. The public spending plans we have inherited include substantial sales of student loan debt in 1997–98 and 1998–99. Given the tightness of our plans generally and in particular the priority we want to give to education programmes, the Government has decided to proceed with the sale.
These overriding objectives were paramount in the decision to proceed with the debt sale. The Government accepts that this will result in the payment of subsidies to purchasers of the debt but intends to accept the most competitive bid following a competitive tendering process. The size of the continuing subsidies cannot be predicted in advance. We will ensure that we achieve the most competitive outcome consistent with these objectives.