'No black hole in student finance,' insists Vince Cable as Labour claims too few students will repay their loans

 

Vince Cable has claimed Labour is creating an "imaginary black hole" in his department's budget after concerns were raised over a £600 million shortfall.

The Business Secretary was challenged to explain how universities, scientists and colleges would be protected while he attempts to cope with fewer students than expected repaying their loans.

Mr Cable insisted it was an "absurd misunderstanding" by the Opposition of the method of forecasting how much cash will be repaid from student loans.

A National Audit Office (NAO) report revealed last year that the Government does not have enough information about 368,000 former students who have a total debt remaining of around £5.3 billion.

The Commons Public Accounts Committee last month suggested the Government was underestimating the value of student loans that will never be paid back.

It reported the total value of outstanding student loans was forecast to quadruple from £46 billion to around £200 billion by 2042 in today's prices, after the move to triple tuition fees to a maximum of £9,000 a year.

According to Government forecasts, around 35 per cent to 40 per cent of this will never be repaid. Under the reforms, student loans are now written off after 30 years.

Shadow business secretary Chuka Umunna questioned why Mr Cable had said the Department for Business, Innovation and Skills was on track to deliver against its spending review settlement, while the NAO said there were significant uncertainties relating to its assets.

He told Mr Cable: "I refer to the billions of pounds worth of student loans. Subsequent to the publication of those accounts, the NAO published a report which revealed that because ministers have dramatically overestimated the number of graduates who will be able to repay the loans to pay for your higher tuition fees, you have in effect blown a hole in the department's budget.

"In fact, the [House of Commons] library estimates they will now have to find an extra £600 million a year at least from 2015/16 because of this.

"Can you explain to this House now how you are going to fix this problem without putting the country's scientists, students, universities and colleges under threat?"

Mr Cable replied: "I think this is an absurd misunderstanding of what is called the Rab Charge system, which depends on long-term projections about earnings growth.

"And I can assure you that if the recovery of the economy continues as it is the Rab Charge estimates will be very substantially revised down and this imaginary black hole will very soon disappear."

PA

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs Student

Learning Support Assistant

£65 - £70 per day: Randstad Education Cardiff: Due to the continual growth and...

Learning Support Assistant - Newport

£65 - £70 per day: Randstad Education Cardiff: Due to the continual growth and...

Junior Developer- CSS, HMTL, Bootstrap

competitive: Progressive Recruitment: A leading company within the healthcare ...

Junior Web Developer- CSS, HMTL

competitive: Progressive Recruitment: A leading company within the healthcare ...

Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz