Leak blows hole in key SNP pledge

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THE SNP's flagship election pledge to replace student loans with grants would cost nearly three times as much as the party claims, according to an explosive analysis written by senior civil servants.

Scotland on Sunday has been passed a secret critique of the Nationalists' key policy commitment prepared by top officials within the Scottish Executive's finance department.

It states that scrapping loans for grants would cost 150m a year, massively in excess of the SNP's estimate of 60m a year.

"To replace loans with grants would cost an additional 150m, which would have to be found within the Scottish Consolidated Fund [the Scottish Executive's budget]," the report says.

The finding is a major embarrassment to the SNP, which has put student finance at the centre of its election fight.

However, the release of the document also leaves the civil service open to accusations that its neutrality has been compromised just six months before Scotland goes to the polls. The analysis, given to Scotland on Sunday by higher education minister Allan Wilson, also challenges another key SNP plan to write off all student loans.

It warns that, under Treasury rules, there would then need to be an immediate repayment of 1.64bn to the Exchequer - a significant slice of the Scottish Executive's annual 30bn budget. The SNP had said it would pay back the money in annual instalments of 40m.

Last night, SNP leader Alex Salmond said he would be writing to Sir John Elvidge, Scotland's most senior civil servant, to demand an explanation. "Civil servants are not meant to be the lickspittles of desperate Executive ministers," he said. Salmond also accused Wilson of breaching the ministerial code of conduct by using the civil service for political ends.

The Scottish Ministerial Code states that ministers have "a duty to uphold the political impartiality of the civil service". It adds: "Civil servants should not be asked to engage in activities likely to call into question their political impartiality, or to give rise to the criticism that people paid from public funds are being used for party political purposes."

Wilson, who asked civil servants to carry out their analysis ahead of a parliamentary debate on student finance last month, was unrepentant last night. He said the findings showed the SNP had massively underestimated the cost of its student finance programme.

The minister added: "People deserve to know what the truth really is. If the SNP want to challenge these costings, then let them. This policy represents a massive subsidy to the better off at the expense of the poorest."

Such civil service documents are usually kept strictly confidential in order to ensure that all advice can be given to politicians in good faith.

The document examines the SNP's plan to spend 100m a year cancelling all existing student loans and replacing them with grants. The Nationalists say this would be split between 40m a year, to pay off in instalments the 1.6bn of student loans currently outstanding to the Treasury, and 60m a year to pay for the new grants.

However, officials have concluded that the instalment plan would not work due to Treasury spending rules, meaning that an SNP government would have to pay it back immediately in full.

The report also identifies several other apparent problems with the SNP's plans. Scottish graduates who have already paid their loans back may be able to claim the cash back, it says.

And it warns that foreign students could also cash in. "We would have to fully consider whether introducing grants would mean that we would have to provide them for EU students. We currently pay fees, but do not profile bursaries or loans. This may be challenged if we introduced grants."

The claims were refuted vigorously by the SNP last night, which claimed that the figures had been based on a wrong assumption. Salmond added: "This shows that when Labour comes under pressure, they will start to play dirty."