Officials are in the process of preparing the first tranche of the pre-2012 student loan book for sale, but the Office For Budget Responsibility says that is unlikely to occur before April and the end of the Government’s 2016/17 financial year.
Instead, it believes the sale will be completed during spring and summer.
In its latest economic and fiscal outlook, the OBR said: “We judge the probability that the first sale will be completed in 2016/17 to be less than 50 per cent.
"We have assumed that the first sale will be completed in early 2017/18, but that the Government will still be able to complete the second sale by the end of the 2017/18 financial year.”
The parts of the student loan book that will be auctioned off will be the income contingent loans that were granted between 1998 and 2012.
The Government’s independent fiscal watchdog predicts that the Treasury will raise £4.7billion through the sale of two trances of the loans during the 2017/18 financial year, and £7.2billion over the following years to 2021.
The student loan book was earmarked for privatisation by Gordon Brown’s Labour administration and later by the Coalition government.
However, their plans were controversial and attracted much opposition.
Brown’s plans were widely attacked and his government was voted out of office before it could proceed.
The Coalition’s 2013 sale of £900million of mortgage-style student loans that were taken out between 1990 and 1998 was roundly criticised as it only raised £160million.
Later that year, then chancellor George Osborne’s attempt to sell parts of the income contingent student loan book was foiled by Coalition colleague and former business secretary Vince Cable.
The privatisation is part of a series of asset sales that the OBR believes will generate £23.2billion for the Government during its 2017/18 financial year.
The vast majority of the money is expected to come from the sale of Bradford & Bingley’s mortgage book, which is expected to raise £15.7billion.
Additionally, the OBR expects the Government to raise £2.5billion when it completes the disposal of the last remaining Lloyds Banking Group shares next year.
When the bank was bailed out, the taxpayer ended up with a 43 per cent stake, which has since been whittled down to less than 8 per cent with a series of sales to institutional investors.
However, the budget watchdog warns that market volatility could push Lloyds’ share below the Government’s break-even point, which would delay the sale: “With the Lloyds share price relatively low, one risk to this forecast is that market volatility pushes it below the trading plan floor, the level below which the Government judges not to represent value for money."
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