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Why 17 December will be a crucial day for UK higher education

  • 3 December 2018

The 17th day of December is a fairly momentous day in history.

According to a website called infoplease, France first recognised America then, the first heavier-than-air plane was flown by the Wright brothers and NAFTA was signed.

A different website records it as the day of the first ever heart, lung and liver transplant, at Papworth Hospital in Cambridgeshire.

But it is 17 December 2018 that is likely to go down as a momentous day for UK higher education because it is the day the independent Office for National Statistics (ONS) will opine on whether and how student loans will appear in the national accounts – and so in the data on the scale of the deficit by which politicians (especially centre-right politicians) like to be judged when assessing their fiscal responsibility. As the Office for National Statistics is independent, there will be nothing the new Universities Minister, Sam Gyimah’s replacement, will be able to do about it.

There are various options (including no change) but the current methodology of keeping both tuition fee loans and maintenance loans off the books – and even including interest on the loans as income which reduces the deficit – might change significantly. This could have profound consequences.

  • In a HEPI blog back in August, I pointed out that people who want the ONS to put egg on Ministers’ faces by putting some of all of the loans back on the national books should be careful what they wish for: it could lead to less funding per student and / or tougher student loan repayment terms.
  • And in our recent paper on Wales, we hinted at to how a change in the accounting rules poses a potential threat to policy all over the UK.

But, in an unspotted announcement on the ONS website, they seem to have given the game away that the accounting of loans WILL change: they make it clear that whatever it is they intend to announce is going to be so complicated that it is likely to take a full year to implement:

“ONS will announce its decision on how these loans will be treated on 17 December 2018. However, it is anticipated that implementation of this decision into its headline statistics will take some time and that any change will be reflected in the public sector finances by the end of 2019.”

The Office for Budget Responsibility, which takes a close interest in the issue, seem to have been kept in the loop too because their latest Economic and Fiscal Outlook drops a big hint about what could happen when it says:

“A prospective change in ONS methodology is likely to affect the scoring of this accrued interest at some point.”

None of this is as important to either higher education or the country as the current Brexit shenanigans of course.

But there is a risk that Brexit proves so diverting that insufficient attention is paid to either the treatment of student loans by the beancounters – or next year’s spending review.

Normally at this point in the political cycle we would be talking about little other than the spending review, but that is perhaps a topic for another day…

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