No. So, that is—. It's sort of a double ring fence, in that it is non-fiscal, so there is no cash attached to it, and it can only be used for the purposes of student loans. I can explain a bit more about why that has come about. So, this is a budget—. As I said, it's a double ring fence, it's probably one of the most restrictive budgets that we have. It's essentially there to show that there is a cost to providing student loans, and it's a way of reflecting that annual cost. It's the bit of the loan that you're not going to get back, so that's how I always like to look at it. It has been on something of an unsustainable footing, I think, ever since that budget has come into play. So, previously, before the start of this spending round, the Treasury accepted that the amount of money in that ring fence was not sufficient and, therefore, on an annual basis, both Welsh Government and the Department for Education would bid annually to say, 'This is how much additional budget we need', and I don't think there was ever a case where that wasn't then provided by the Treasury.
Back at the beginning of this spending round, Treasury took a different approach and put quite a large amount of money into the Department for Education, of which we got a Barnett consequential. That hugely increased that ring-fenced budget; it went up to nearly £1 billion, and we were underspending quite significantly because of the differing policies. Obviously, we don't have as many loans as England do with the Welsh Government's student loan policy. There's been a lot of review going on between the Treasury and the Department for Education, and now we have a different policy applied to how that budget works.
So, there are two elements within that budget. One is, I guess, the relatively stable part of the budget, which is what we call the RAB charge—RAB just stands for 'resource accounting and budgeting'; it's an accounting term. It's simple insofar as it is a percentage that's applied to the amount of loans that are issued in that particular year. How the percentage is calculated is very complex; it comes out of the student loans model, but it is just applied to the amount of loans that are issued. That's one part of it. The other part of it is the change in the actual student loan book and the value of the loan book, which is very, very volatile, partly because it's so big, so small changes can have big numbers attached to them, but simply because of the reasons for the change, which can be around, again, discount rates, demographics, income distribution—all of those factors in what's the chances of you getting these loans back.
So, those two elements now are treated differently in terms of this budget, which is why you see this reduction. The budget that we have now only relates to that RAB charge element. That has now been set at a baseline; we're confident it is sufficient for our current student loan policy, and it will change going forward in line with changes to DfE's equivalent budget and Barnett applied to it. The volatile part of it, the student loan books, both ourselves and the Department for Education will provide a forecast of that to the Treasury every year at the supplementary estimates. There will be a reasonable test applied to it, but ultimately that will be provided at the supplementary estimate. It has gone up and down in the past, and sometimes there hasn't even been a need for additional budget cover. But that's how that budget will operate going forward, and that's why you see the reduction in this budget.