The Dearing report : some funding issues : third report / Education and Employment Committee.

  • Great Britain. Parliament. House of Commons. Education and Employment Committee.
Date:
1997
Catalogue details

Licence: Open Government Licence

Credit: The Dearing report : some funding issues : third report / Education and Employment Committee. Source: Wellcome Collection.

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    political decision is taken ... then I am sure the accounting devices can be found.”*? The main point is that it would appear to be possible, without breaching any international accounting guidelines, for Ministers to remove at least part of the spending on student loans from the Control Total, in the same way that certain other items are currently excluded.” Could spending on student loans be removed from the PSBR? 28. We have noted in the previous paragraph that Messrs Barr and Crawford argued that borrowing to fund expenditure on student loans could be excluded from the PSBR. But this overlooks the point that, however the expenditure is classified within the public accounts, if it is raised by borrowing that borrowing will be reflected in the PSBR. As Dr Robinson put it, “I do not think you can get away from the fact that borrowing is borrowing.” He added: “There is no accounting trick available to stop the PSBR going up”.* Treasury officials made the same point: “There is no difference in the impact on the borrowing requirement [italics added] between a billion for grants to students and a billion in new loans because that lending is in the borrowing requirement and still has to be financed.”*° In short, it seems to us that the reference by Messrs Barr and Crawford to the PSBR in their submission to the inquiry is something of a red herring. We believe the focus of any change in treatment would have to be on excluding recoverable expenditure on student loans from the Public Expenditure Control Total, the measure by which the Government assesses whether it is meeting its public expenditure targets. Treasury officials noted that “the definition of the control total is something for Treasury Ministers”, and their decisions in this respect are not constrained by international accounting conventions.*’ Would a change in treatment of student loans generate more money? 29. Messrs Barr and Crawford argue that, by changing the way in which spending on student loans is scored in the accounts, the Government would reduce the headline public spending level, and could therefore spend an additional sum, equivalent to the amount of the reduction, each year.*® While they emphatically do not argue that this money would — or indeed should — be hypothecated to higher education,” others have drawn that conclusion, for instance the Committee of Vice Chancellors and Principals: “showing the net effect of the loans on public accounts rather than the total effect ... would free up resources {italics added].”*° Hence the impression has been formed that a simple accounting change could be made which would generate more money for higher education. However, having examined the evidence, we do not think that this is the case. Although student loans can be treated differently by the Treasury for expenditure definition purposes, as described above, such a change would not in itself raise any more money.°' Where loans are made, the Government would have to finance them — either by taxation, borrowing or reducing spending elsewhere. 3Q.255. See also Q.302. “4Treasury officials, Q.344. SQ 298: Appendix 17. ehcp b 7 79 344 and Appendix 14, paragraphs 17-19. 48 Appendix 8, Executive Summary and Annex 2. 99.197. We 721 >'Mr Blunkett told us in this context: I do not believe that there is an immediate pot of gold. (Q.213)
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