Rising student loans threaten to ruin Bis finances
By Georgie Keate
Vince Cable's government department will struggle to survive under the weight of student loan payments, a watchdog has revealed.
According to the National Audit Office (NAO), the Department for Business, Innovation and Skills (Bis) will have to reduce its funding to 'core resources' by 27% until 2015 if it is to avoid running out of money.
"The department should meet the challenges posed by the 2010 spending review through coherent strategic planning, rather than short term fire-fighting," the report advised.
"Until it does so, the department will not achieve the value for money it needs from its financial management activities."
The reduction plans have not taken into account the higher education reforms which have doubled student loan repayments. Most of these will be repaid after 2015.
Once these figures are included, Bis will be reducing its spending by only six per cent.
The report warns that the department's management and skills are not 'sufficient' to manage the rocky road ahead.
A spokesperson from Bis said: " We are committed to a 27 per cent reduction in our resources and, as recognised by the NAO, we are working hard to ensure we have the skills and capacity to manage this challenging, but achievable target."
Bis is planning to stay afloat by attracting private investment to Royal Mail, setting up the Green Investment Bank and providing £1.3 billion to the Post Office network.