Ministers' blunder 'blows hole' in help for students
- Published on Thursday, 28 November 2013 10:05
- Written by Govtoday staff
A National Audit Office report has revealed that blunders by BIS ministers have blown a huge £600 million a year hole in support for Britain's students and their families, at a time when the country is facing a cost of living crisis.
The NAO report, Student Loan Repayments, published today reveals that BIS ministers dramatically over-estimated the number of graduates who will be able to repay the new, higher student fees introduced by the Tory led government.
Ministers assumed that 35% of the new loans would never be repaid – but House of Commons Library analysis of the NAO's report reveals today that the correct figure is over 40%.
Universities Minister David Willetts has himself suggested that the shortfall is the result of the cost of living crisis hitting families across Britain with earnings being "lower than was forecast".
House of Commons Library analysis, commissioned by Liam Byrne, reveals that the miscalculation means that BIS will now have to find an extra £600 million a year from 2015/16, blowing a huge hole in the department's budget. The blunder may total £3 billion over the course of the next Parliament.
Liam Byrne MP, Labour's Minister for Higher Education, Skills and Science said:
"Labour has warned ministers time and time again that tripling fees overnight would create huge new debts that lots of students, facing a cost-of-living crisis, couldn't afford to pay back.
"In May, the Universities Minister was boasting of the government's 'text-book' reforms. Now we learn that blundering out-of-touch ministers got their sums so badly wrong that there's a £600 million hole in the department's budget.
"We need to know fast how ministers got it so wrong, and how they're going to fix it without putting the Britain's scientists, students and colleges under threat.
"Worse of all, we may be at the point where so many students loans are being written off, that the government's new student finance system is actually more expensive than the old arrangements, even though the government is asking students for three times as much money."
Source: Labour Party