Danny Alexander confirms: the student loan book will be privatised

Off the book borrowing of the worst kind.

Danny Alexander, the Chief Secretary to the Treasury, has confirmed that the Government will be privatising student loans as part of a plan to raise £15bn from sales of public assets, in order to boost investment.

Speaking to the Commons today, he said:

We will take action to sell off £15 billion worth of public assets by 2020.

£10billion of that money will come from corporate and financial assets like the student loan book.

And the other £5 billion will come from land and property.

Mr Speaker, government is the custodian of the taxpayers’ assets.

When we no longer need them, we should sell them back at a fair price – not act like a compulsive hoarder.

The sale is not expected to be finalised until 2015, two years later than originally planned.

In order to get a decent amount for the loan book, the government is expected to offer sweeteners to whoever purchases it. The most extreme of these would be the proposal, revealed earlier this month, to lift the cap on interest paid by people who took out loans between 1998 and 2012.

That change would increase the revenue for whoever owned the loan book in 20 to 30 years time, because people who would otherwise have paid their loans off will still owe money. But it won't do anything for the government's balance sheet today – unless the government sells the book to a private company for a lump sum, which is exactly what it plans to do.

Another sweetener proposed has been what is called a "synthetic hedge". That would involve artificially replicating the change, by promising whoever buys the student loans that they will be paid the difference between the actual cash flow and the estimated cash flow which would have been received without the cap. It's fairer – because it spreads the cost throughout all taxpayers, rather than lumping it on young graduates – but it's also far more cowardly. Crucially, because the government would't have to pay any extra cash flow now, it won't have to work out where that extra revenue comes from. That's a difficulty it gets to offload onto a future government.

Whatever happens, a sweetener of sorts will have to be offered. Student loans are a classic example of an asset which is worth far more to the government than any private entity: a revenue stream spread over decades, with a high degree of variability in the value of the repayments.

For an organisation, like the UK state, which can borrow at record-low interest rates for decades on end, selling it off at a discount to secure a cash lump sum now is terrible financial management. It is as though they had decided borrowing to invest was a good thing, but they'd rather pay higher interest rates than they have to in order to keep it off the books. Surely not…

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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No, the battle in Momentum isn't about young against old

Jon Lansman and his allies' narrative doesn't add up, argues Rida Vaquas.

If you examined the recent coverage around Momentum, you’d be forgiven for thinking that it was headed towards an acrimonious split, judging by the vitriol, paranoia and lurid accusations that have appeared online in the last couple days. You’d also be forgiven for thinking that this divide was between a Trotskyist old guard who can’t countenance new ways of working, and hip youngsters who are filled with idealism and better at memes. You might then be incredibly bemused as to how the Trotskyists Momentum was keen to deny existed over the summer have suddenly come to the brink of launching a ‘takeover bid’.

However these accounts, whatever intentions or frustrations that they are driven by, largely misrepresent the dispute within Momentum and what transpired at the now infamous National Committee meeting last Saturday.

In the first instance, ‘young people’ are by no means universally on the side of e-democracy as embodied by the MxV online platform, nor did all young people at the National Committee vote for Jon Lansman’s proposal which would make this platform the essential method of deciding Momentum policy.

Being on National Committee as the representative from Red Labour, I spoke in favour of a conference with delegates from local groups, believing this is the best way to ensure local groups are at the forefront of what we do as an organisation.

I was nineteen years old then. Unfortunately speaking and voting in favour of a delegates based conference has morphed me into a Trotskyist sectarian from the 1970s, aging me by over thirty years.

Moreover I was by no means the only young person in favour of this, Josie Runswick (LGBT+ representative) and the Scottish delegates Martyn Cook and Lauren Gilmour are all under thirty and all voted for a delegates based national conference. I say this to highlight that the caricature of an intergenerational war between the old and the new is precisely that: a caricature bearing little relation to a much more nuanced reality.

Furthermore, I believe that many people who voted for a delegates-based conference would be rather astounded to find themselves described as Trotskyists. I do not deny that there are Trotskyists on National Committee, nor do I deny that Trotskyists supported a delegates-based conference – that is an open position of theirs. What I do object is a characterisation of the 32 delegates who voted for a delegates-based conference as Trotskyists, or at best, gullible fools who’ve been taken in.  Many regional delegates were mandated by the people to whom they are accountable to support a national conference based on this democratic model, following broad and free political discussion within their regions. As thrilling as it might be to fantasise about a sinister plot driven by the shadow emperors of the hard Left against all that it is sensible and moderate in Momentum, the truth is rather more mundane. Jon Lansman and his supporters failed to convince people in local groups of the merits of his e-democracy proposal, and as a result lost the vote.

I do not think that Momentum is doomed to fail on account of the particular details of our internal structures, providing that there is democracy, accountability and grassroots participation embedded into it. I do not think Momentum is doomed to fail the moment Jon Lansman, however much respect I have for him, loses a vote. I do not even think Momentum is doomed to fail if Trotskyists are involved, or even win sometimes, if they make their case openly and convince others of their ideas in the structures available.

The existential threat that Momentum faces is none of these things, it is the propagation of a toxic and polarised political culture based on cliques and personal loyalties as opposed to genuine political discussion on how we can transform labour movement and transform society. It is a political culture in which those opposed to you in the organisation are treated as alien invaders hell-bent on destroying it, even when we’ve worked together to build it up, and we worked together before the Corbyn moment even happened. It is a political culture where members drag others through the mud, using the rhetoric of the Right that’s been used to attack all of us, on social and national media and lend their tacit support to witch hunts that saw thousands of Labour members and supporters barred from voting in the summer. It is ultimately a political culture in which our trust in each other and capacity to work together on is irreparably eroded.

We have a tremendous task facing us: to fight for a socialist alternative in a global context where far right populism is rapidly accruing victories; to fight for the Labour Party to win governmental power; to fight for a world in which working class people have the power to collectively change their lives and change the societies we live in. In short: there is an urgent need to get our act together. This will not be accomplished by sniping about ‘saboteurs’ but by debating the kind of politics we want clearly and openly, and then coming together to campaign from a grassroots level upwards.

Rida Vaquas is Red Labour Representative on Momentum National Committee.