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The quiet sale of some Scottish student loans in 2013 was worth £21m

October 2, 2015

The Scottish Government Consolidated Accounts for 2014-15, published today, include a figure of £21.4m  for the proceeds of the last batch of mortgage style loans by the Scottish Government in 2013: see p90, here). For more background on the sale of student loans, see footnote 1.

We already knew the 2013 sale had occurred, as the Scottish Government’s participation was referred to briefly in the press notice put out  by the UK government on 25 November 2013: footnote 3, see here.  The UK press notice gave full details of who the loans had been sold to, the total proceeds of the sale (£160m),  how many people were affected (quarter of a million) and what their repayment status was: it’s not absolutely clear if the figures are UK or England-only, but the first seems most likely from the way it is written.

However, there does not appear to have been any parallel announcement by the Scottish Government at the same time (searching the SG news archive for that month and generally googling).

It’s possible an announcement about the transfer of some Scottish student debt to a private body  did not fit well against the publication of the White Paper on independence the day after – but the decision to say nothing official at the time meant that there was nothing on the record here that made it clear that this was happening and there was no information available at all on how much  lending to former Scottish students was at stake and how many  were affected and what their characteristics were  (we still don’t know that).  Relying on a brief reference to the Scottish Government in  footnote 3 of the UK news release was something of  a tangential public information strategy.

Letters may well have been sent to the individual borrowers affected:  but it’s hard to see why the SG judged it was not important for the Scottish public to know what was happening, not least when Scotland accounted for rather more than its population share of the total transaction.  It’s important to note here that (as  the recent PQ response below implies) the SG will have had a choice whether to take part in this sale: they were properly accountable for the portion relating to Scotland.

It’s another case where the ability of those outside government to understand what is happening to student finance in Scotland has been hampered by the government’s selective approach to sharing information that would aid scrutiny.

The accounts also tell a story of a rapidly rising figure for student loan due to be repaid by former Scottish students.  More on that to come.


Mortgage-style loans were the original version of student loan, introduced in 1990.  They were replaced with the current type, income contingent loans, for new students from 1999.  There have been two previous rounds of sales of mortgage-style loans to private sector.  There have been no sales so far of income contingent loans, though as Andrew McGettigan has written recently, the UK government budget plans still anticipate proceeds from such a sale and time is running out for a decision (PQs have elicited the answer that the SG has “no plans” to participate in such a sale: see S4W25458 here).

Footnote (2)

Anyone looking at the accounts will see that the sale proceeds represented a £1.7m loss based on the “carrying value” of £23.1m. In essence, the £23m is what the calculation of what the loans would have been worth in the accounts as a government asset,  had they been kept.  Bearing in mind that the SLC will no longer have to fund collecting these loans, £1.7m seems likely to be an unexceptional figure here.  The audit of the accounts makes no comment.  It may a minor point worth checking, but is probably not a story.


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