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Monetary & Financial Statistics: July 2012 -6-30369121518211994199720002003200620092012Per centOther loans and advancesOther loans and advances (exc student loans) A new measure of consumer credit By Sylaja Srinivasan Tel: +44 (0)20 7601 5706 Email: mfsd_ms@bankofengland.co.uk The current measure of consumer credit published by the Bank of England includes lending on credit cards, overdrafts and other loans, including those made through Government student finance schemes. The stock of student loans has doubled over the five years to 5 April 2012 to £47 billion, and now represents more than 20% of the stock of overall consumer credit. With student loans unlikely to be affected by the same factors that influence the other components of consumer credit, the Bank is proposing a new measure of consumer credit that excludes student loans. Consumer credit excluding student loans is estimated to have contracted by 0.4% in the year to June 2012. This new measure of consumer credit will be introduced in the August 2012 Bankstats release. Introduction The Bank of England publishes monthly data on consumer credit, split into lending on credit cards and other loans and advances.1 The series for other loans and advances includes overdrafts and loans made through Government student finance schemes ("student loans"). Data on student loans are provided by the Student Loans Company (SLC). Student loans cover maintenance loans paid directly to students and, from 2006/07 onwards, tuition fees to Higher Education Institutions on behalf of students who have taken out tuition fee loans. According to the SLC, the outstanding balance of student loans has doubled over the five years to 5 April 2012 to £47 billion,2 and now represents more than 20% of the stock of overall consumer credit. Government projections suggest that the outstanding balance of student loans will be more than £80 billion by 2017/18.3 1 Available via the Statistical Release "Lending to Individuals", www.bankofengland.co.uk/statistics/Pages/li/2012/Jun/default.aspx and Bankstats Tables A5.2 (www.bankofengland.co.uk/statistics/Documents/bankstats/current/tabA5.2.xls) and A5.6 (www.bankofengland.co.uk/statistics/Documents/bankstats/current/tabA5.6.xls). For definitions of consumer credit see explanatory notes at www.bankofengland.co.uk/statistics/Pages/iadb/notesiadb/ltoi.aspx. 2 For more details on these data, see www.slc.co.uk/statistics/national-statistics.aspx .3 For details see www.parliament.uk/briefing-papers/SN01079.pdf. The projection includes estimates for the Devolved Administrations. For more details on the projection for England, see "Higher Education: Students at the Heart of the System", Department for Business, Innovation and Skills, June 2011; available at www.bis.gov.uk/assets/biscore/higher-education/docs/h/11-944-higher-education-students-at-heart-of-system.pdf. New Measure Student loans are unlikely to be affected by the same factors that influence the other components of consumer credit: credit cards, overdrafts and other loans. To make the underlying trends in consumer credit more transparent, the Bank is proposing a new measure of other loans and advances, and consequently overall consumer credit, which excludes student loans. The annual growth rate in the stock of other loans and advances (including student loans) is positive and has picked up over the recent past, following a slowdown after the financial crisis (Chart A). Excluding student loans, this annual growth rate has been negative since 2009. Chart A: Annual growth rate of other loans and advances The pickup in the growth in the current measure of overall consumer credit (Chart B) – which includes credit cards – reflects a pickup in the stock of other loans and advances, which includes student loans. The annual growth rate in the proposed new measure, which excludes student loans, has been negative over the recent past. Consumer credit excluding student loans is estimated to have contracted by 0.4% in the year to June 2012. Monetary & Financial Statistics: July 2012 -6-30369121518211994199720002003200620092012Per centConsumer creditConsumer credit (exc student loans)Consumer Credit Credit Cards Other consumer credit Loans and Overdrafts Student loans Consumer Credit Credit Cards Other consumer credit Loans and Overdrafts Chart B: Annual growth rate of consumer credit Figure 1 shows the main components that comprise the current and new measure of consumer credit. The Bank of England will be publishing the new measure of other loans and advances and consumer credit in Tables A5.2 and A5.6, in the August 2012 Bankstats release. Key series affected by these changes are shown in Annexes 1 and 2.
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