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.

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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