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George Osborne Wants to Turn Students Into Cash Cows for Rich Spivs

The UK's biggest ever government fire sale includes the privatisation of all student loans taken out between 1998 and 2012.

by Aaron Bastani
22 May 2015, 3:20pm

George Osborne (Photo via)

On Wednesday, George Osborne announced the biggest ever flogging of government assets to big business. This is apparently a "plan to make Britain work better", which will be published over the next few weeks. It includes the government selling its shares in banks such as Lloyds, to make the economy more "productive" – never mind that the government had to buy a stake in the banks because otherwise the economy would have totally collapsed after they screwed everything up.

Over half of the £23 billion fire sale will come from selling over a decade of student loans – running from 1998 to 2012. Whoever buys that asset will, in effect, be purchasing the right to collect on all student loans taken out between 1998 and 2012. That little bit skimmed off the top of your pay check every month that goes to the government's not-for-profit Student Loans Company, will instead go to a private company.

Osborne first announced his intention to sell the loan book back in 2013. Back then, many claimed he was already guilty of getting rid of a tranche of pre-1998 loans for way less than they were worth – their face value was estimated at just under £900 million they went for less than a fifth of that. Much like the sell-off of Royal Mail in 2014 – which lost the taxpayer £1 billion and let investors cash in on a share pricespike – that sale made clear that Osborne loves to offer a bargain to his mates in the City whenever he wants to shift public assets.

What stopped the second, much larger sale of student loans was the Liberal Democrats' Vince Cable, as he pulled the plug on a measure that was set to make his party even more unpopular with students, if that was possible. The attempt saw sparked protest across the country and to be honest it was difficult to find anyone other than the Tories who thought it was a good idea. While Cable and the protesters won that time, with Osborne allegedly not finding out until the news went public, the Tories are governing alone now, so the Chancellor can do what he wants.

Some student protesters (Photo by Henry Langston)

The reason people were protesting is that it could possibly mean the cost of student loans going up – even for those who already took their loan out as far back as 1998, when the terms were comparatively good.

At the moment, the interest rate on the loans is limited to the rate of inflation plus 1 percent. That cap would likely have had to be removed to make the loan book a more attractive asset to prospective buyers. Why would a savvy investor buy a bunch of loans otherwise? Interest rates will almost certainly have to change, while you can also expect the introduction of stronger "enforcement" measures to reduce non-repayment rates – so expect bailiffs at the door if you don't cough up. This would change one side of the contract that students with loans have already signed. That may sound unfair, but a leaked report from the first attempt to sell the loans suggests that this is on the cards anyway, and that the Conservatives don't really give too many shits about contractual niceties.

With the broader logic to make student debt more attractive to private investors, these products become less and less about offering cheap credit to those wanting to go to university, and more about creating yet more debt-financed revenues for Thomas Pink shirt wearing spivs. With that in mind, it seems highly possible that the Conservatives will attempt to abolish the cap on tuition fees over the next few years. The days of £9,000 tuition fees could be looked back on as halcyon days.

Selling off much of the student loan book shows just how far the government is prepared to go in selling nearly everything the state owns. It's also a good example of how little the Tories let on their real plans during the election. It's precisely the kind of policy that many of its voters may well have been against, and certainly would have been unaware of – given that there was, astonishingly, no mention of it in the Conservative manifesto.

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Like hearing about the government making money in a stupid way? Watch our documentary – The Luxury Item: Why Is the British Government Taxing Periods?

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Even where public-sector ownership is indisputably better – as was the case with the East Coast train line which made £1 billion for the taxpayer before being, sigh, re-privatised – the Conservatives, are zealots for a cause which leaves everyday Brits with shit service for astronomical prices, and so are Labour.

On Wednesday night George Osborne spoke of how "it is now within our grasp to make Britain the most prosperous country in the world". So prosperous, it seems, that the point of going to university is for young people to become a convenient new type of credit card to fund the baller lifestyles of rich creditors, taken in an increased portion of your monthly pay cheque for the rest of your life. So prosperous that contractual agreements could be changed retrospectively to squeeze yet more money out of normal people.

The only people really prospering in 21st Century Britain are people like the ones set to buy these student loans – and they are set to make a killing at the expense of the taxpayer, students and just about everyone else.

@AaronBastani

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