The secret plan to raise the price of student finance hints the government wants to privatise loans

Deferred gratification is not this lot's strong point.

Since the Guardian's scoop about "Project Hero", the secret Government report which proposed retroactively raising the price of student loans, there've been a couple of extra points raised which deserve thinking about.

The first is about the language used. Ministers were given a script, by which they might sell the plans to recent graduates. They were supposed to tell them that:

We all live in difficult times. You have a deal which is so much better than your younger siblings (they will incur up to £9,000 tuition fees and up to RPI+3% interest rates); it won’t make any difference to how much you pay in the short or medium term, just how long you pay it for.

The timing of the report is important to bear in mind, here. It was finalised after the Government had already approved, but not yet implemented, the post-2012 fee regime. A fee regime which was described as "fairer - opening the doors of universities to everyone, regardless of where they're from" and "the fairest option on the table - fairer than the current system and fairer than the graduate tax too" by David Cameron, and "a system of graduate contributions that is fair for all" by David Willets.

Few students going in to university in 2012 will have thought that they were experiencing a "fairer" system than their older siblings did; so it's interesting to know that exactly at the same time that ministers were making these pronouncements, the experts they'd hired to work out how to squeeze the most out of the graduates were busy telling them that it was self-evident that the fee regime was being made much worse.

The second point is the motivation for the changes. Raising the interest rate payable on loan balances won't get any extra money to the government now, when the vast majority of loans taken out since 1998 remain outstanding. Instead, it will increase the time taken to fully pay off the loans, in some cases pushing it all the way back to the 25-year/retirement maximum. That means as time goes on, and people who would have paid back their loans carry on paying off the interest, more money comes into the state.

But this is a government supremely, myopically concerned with the deficit now. If they were able to defer pleasure, they'd have waited to cut the deficit until we were out of depression, after all. So why do it? To make the loan book more appealing to private investors.

The idea of selling off the student loan portfolio has been mooted for a while now. It's an easy way of turning a bunch of future income streams into one handy payment. And if that sounds a bit like a daytime TV advert for debt refinancing, that's because it is. The Government would inevitably sell the debt – which is estimated at between £35bn and £45bn – at far below what they would get if they held on to it. That's partially because you always lose cash if you divest yourself of risk, but it's also because this is not a sale which we can expect to be entered into with the Government negotiating at strength. It's such a political football that any potential buyer will know that once the decision's been made, they aren't going to back track – and so offers below par will be accepted to save face.

That's even more likely to be the case if the Government decides to privatise the loan book before the election in 2015. That will be a fire-sale to remember.

If the measures proposed in Project Hero are enacted, it won't be the end of the fight over student finance – just the start of the next battle.

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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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.