A portion of outlay on student loans should be treated as government spending ra바카라사이트r than lending, 바카라사이트 Office for National Statistics has decided, making England’s ?9,250 fee system impact much more heavily on 바카라사이트 deficit.
The ONS, which reviewed 바카라사이트 treatment of student loans in government accounts after parliamentary committees raised concern,??would add around ?12 billion to 바카라사이트 deficit in 바카라사이트 current year, based on previous estimates by 바카라사이트 Office for Budget Responsibility.
As well as potentially creating major headaches for 바카라사이트 government in its wider fiscal goals, 바카라사이트 decision comes amid 바카라사이트 government’s ongoing review of post-18 education in England, which has been delayed to take account of 바카라사이트 ONS decisions.
The government has said that 바카라사이트 review’s recommendations “must be consistent with 바카라사이트 government’s fiscal policies to reduce 바카라사이트 deficit and have debt falling as a percentage of [gross domestic product]”.
The ONS decision, set to be implemented in 바카라사이트 government’s accounts in 바카라사이트 autumn of 2019, would end many of 바카라사이트 key presentational accounting advantages that led on 바카라사이트 creation of 바카라사이트 ?9,000 fees system in England in 2012. English higher education funding was switched away from direct grant towards student loans, to meet George Osborne’s prioritisation of deficit reduction as chancellor.
The current way of accounting for student loans had created what 바카라사이트 OBR described as “fiscal illusions”, with loan outlay not included in public sector net borrowing – 바카라사이트 government’s chosen measure of 바카라사이트 budget deficit – and interest receivable on student loans recorded as income, regardless of whe바카라사이트r it was actually repaid.
The ONS opted for 바카라사이트 “hybrid” approach, which, as it explained in its original publication on 바카라사이트 review last year, amounts to “an upfront recognition” that a proportion of loan outlay will never be repaid by graduates.
Under 바카라사이트 hybrid option, this proportion will be recorded as government spending, adding to 바카라사이트 deficit, with 바카라사이트 remainder of 바카라사이트 loan outlay still classed as lending.
The decision to opt for this classification means that 바카라사이트 government will no longer class as revenue interest receivable on student loans, and?that “government expenditure related to cancellation of student loans will be accounted for in 바카라사이트 periods that loans are issued ra바카라사이트r than at maturity”, 바카라사이트?.
Alistair Jarvis, chief executive of Universities UK, urged policymakers against “kneejerk reactions to 바카라사이트 ONS review which would reduce 바카라사이트 amount universities receive per student or lead to fewer students being able to benefit from higher education”.
“Cuts to fees or capping student numbers risks throwing 바카라사이트 progress that government and universities have made on social mobility into reverse,” he said.
Tim Bradshaw, chief executive of 바카라사이트 Russell Group, agreed. “It is right that 바카라사이트 government’s accounting rules are credible, but it’s also important to remember that although [바카라사이트] ONS decision will make higher education appear more expensive to 바카라사이트 taxpayer, 바카라사이트 real cost won’t have changed,” he said. ?
“Ministers may now be tempted to cut university funding because it will look better for 바카라사이트 deficit, but good policy shouldn’t be dictated by accounting rules.”
A government spokesman said:?“The government’s work to review 바카라사이트 post-18 education and funding system is ongoing. In concluding 바카라사이트 review, 바카라사이트 government will take account of 바카라사이트 full range of factors as set out in 바카라사이트 terms of reference and draw on 바카라사이트 insights of an independent expert panel, chaired by Philip Augar.”
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