In 2007 approximately 18,000 unsecured personal loans were taken out to pay for school fees, with a total value of around GBP165 million according to Sainsburys Bank.
Looking at the historical data Sainsburys Bank also found that over GBP2 billion extra was spent on school fees in 2006 compared with just 2 years previously. This is a massive additional amount to cover and explains the increasing use of unsecured personal loans and other forms of borrowing to fund childrens educations.
Looking ahead Sainsburys Bank also expect the trend to continue. With a rising cost of living, more children enjoying private education and also the fact that school fees themselves rise at levels well above the rate of inflation they are predicting more borrowing.
The Prime Minister, Gordon Brown, apparently told the people of the UK that Northern Rock could be sold for a profit in the future while his own advisors had said otherwise.
Gordon Brown had stated in a press conference in February that Northern Rock could be sold for a profit when the financial markets had recovered, though the advisors brought in to look at the options for Northern Rock had said a GBP450 million loss was the best possible outcome, with the most likely result being a loss of GBP1.28 billion. This figure was based on stable house prices, so in the current climate the loss is expected to be even greater.
The Treasury has stated that its purpose in buying out Northern Rock was to stabilise the bank and also the rest of the financial sector, not to make a profit. However Mr Brown should not have misled the public by saying a sale would generate a profit. Oh to have an honest politician, we can but dream.
Tesco Finance is understood to be aiming for a full retail bank status, offering the full range of bank products and services to customers.
The 50 percent stake RBS hold in Tesco Finance is to be bought back by Tesco itself, at a cost of GBP950 million. The initial plan appears to be an expansion of the current product range offered, with home insurance the first to receive the extra attention. After that Tesco Finance are expected to start offering basic bank accounts, placing themselves in direct competition with the high street banks.
The position of Tesco Finance, using its core Tesco brand to win customers through supermarket retailing, is a strong one. Most people in the UK use Tesco at some time, so the chance to promote a full bank operation via the stores and online could prove an excellent opportunity.
