Labour’s tuition fees discussions are like watching a slow-motion car crash

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February 11, 2015 by Paul Goldsmith

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Sometimes, political parties do things that are actually hard to watch, so utterly amateurish and nonsensical are they. Trying to gain a political advantage, regardless of the economics, they go down some policy cul-de-sacs and all one can do is stand at the entrance of those dead end roads and wave them back again as they realise what they’ve done and turn round. This is where I think Labour are going with their ideas about tuition fees.

There are numerous arguments against tuition fees, and they are mostly long-term philosophical arguments about the value of education. That we should be supporting our young people in their quest for a higher education seems obvious, but pretending that it doesn’t cost us anything is somewhere between naive and mendacious. New Labour’s highly commendable ‘wider participation’ agenda that aimed to have 50% of the population go to university has got us from about 20% of young people doing so to above 40%. No problems there, even though some studies have suggested that the most successful economies have only 33% of their jobs being of ‘graduate-level’, which, on the ground, mean people with degrees are not necessarily ending up in jobs for which degrees are necessary.

But these extra people going to universities have to be funded. Every penny spent on them has to be taken from elsewhere, even if there is an argument that we should borrow to do so, as investments in higher education will increase our productive capacity in the future. At the moment, though, if you think about it, a free university education involves a dinner lady paying through their taxes for someone else to be put in a position to earn a lot more than them. Also, people who are paying for their higher education are more likely to make the most of it, and demand more of their university, who would have the funds to provide more. So there are also successful circular arguments for charging tuition fees.

Yes, the raising of tuition fees from £3000 to £9000 a year at the start of this Parliament was very controversial, even resulting in riotous protests in London in late 2010 and early 2011. It wasn’t helped by Nick Clegg and the Lib Dems promising to abolish tuition fees in the 2010 General election campaign then giving that up in coalition negotiations in favour of constitutional changes to the Lords and election systems. But that doesn’t mean it was the wrong thing to do.

Once a potential university student actually takes any time to look behind how tuition fees work, they shouldn’t really have a problem with them. The £3000 fees were paid up front, the £9000 ones are paid after graduation. The £3000 fees were paid regardless of income, the £9000 ones are only paid once you earn past a certain threshold which if you earn it means you aren’t actually poor anymore. Furthermore, the poorest students get help with their costs, as the money is released for the government to be able to target help towards them. Not only that, but universities, forced to start responding to the needs of students, are increasing the quality of what they are offering, not just in facilities, but also in tutor contact and other aspects of the education available.

This has led to large numbers of international students applying for our universities, bringing in extra revenue and expertise. This has led to a record number of applicants at the end of the schooling period. It has also led to a record number of disadvantaged students applying.

A change from £9000 to £6000, as Labour seem to be proposing, would result in a £10bn shortfall in funding for universities. Despite promises, Ed Balls can’t seem to explain how that would be filled, without it, there would have to be a fall in university provision. This means bigger classes and inferior teaching. There would also be a fall in the £700m used to finance disadvantaged students. At the moment, the more well off students are subsidising the disadvantaged students, both before and after graduation. This the policy is progressive. What could be Labour’s problem with that?

Labour seem to think that they can replace tuition fees with some sort of graduate tax, although again these proposals have not been properly detailed. The money from that tax would not get to universities until about 10 years after a student graduates, instead of up front, following the student, as it does now. Furthermore, whilst there is a mechanism for getting fees off EU and overseas students, there is no mechanism for collecting tax off them in the future, and Labour can’t tax UK citizens and charge tuition fees for EU students, of which there are 43,000 each year. This black hole in funding could be catastrophic for universities.

Labour have also suggested they might just make science and technology degrees £6000, which seems a lovely idea as it reduces the price paid for the degrees that one could argue are most ‘useful’ for the country. Yet, those degrees tend to be the most costly to provide, so universities would respond by providing less of those courses.

Policies that offer short-term political gain (young people are not going to turn down a £3000 cut in their fees) but have obvious short-term economic consequences and massive long-term consequences are not where Labour should be going right now. Controversial though the £9000 was, it has been a success, and challenging it as they are just makes me want to avert my eyes.

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One thought on “Labour’s tuition fees discussions are like watching a slow-motion car crash

  1. Glen says:

    I agree, Paul, it seems fairer to charge former students once they can afford it, rather than getting dinner ladies to pay. But it seems less fair in the wider context of generational inequality, and this relates also to your previous post. Older people have certainly lost out in terms of interest on their savings recently, but surely a much bigger story is the massive transfer of wealth to older generations through housing equity and final-salary pensions. This is a transfer that has been facilitated by successive governments, so isn’t there a responsibility to address this imbalance?

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