§ Helen JonesTo ask the Secretary of State for Education and Employment if he will make a statement on the second competition to sell more of the student loan portfolio. [44432]
§ Dr. HowellsI have today announced the launch of a second competition to sell student loan debt. This is the continuation of a policy first announced in September 1996, and follows the successful completion of the first sale in March 1998 when NatWest Markets was the chosen bidder for a loan portfolio in the region of £1 billion.
My right hon. Friend the Chancellor of the Exchequer said in his statement of 10 July 1997, Official Report, columns 607–08, that we would continue the policy of student loan debt sales, underlining our commitment to developing a wide range of public-private partnerships which involve a transfer of risk to the private sector. This sale transfers to the private sector much of the risk of loans defaulting. It also helps us to meet our pledge to work within the spending plans already announced for the first two years of our term.
We have appointed the merchant bank N. M. Rothschild and Sons and the commercial lawyers Lovell White Durrant as advisers to the sale. It makes sense to do so as they also acted as advisers to the first debt sale and have extensive knowledge and experience of these types of transactions. They will assist us in running a vigorous competition and help ensure the participation of some of the world's most prestigious financial institutions so that we obtain the most competitive bid possible.
We aim to sell loans of a similar value or greater than in the first sale. All the loans sold will have been made 257W under the current scheme. None of the new income contingent loans available from the beginning of the 1998–99 academic year will be involved.