Scrapping fees is not best value for education

WHAT NOW for university tuition fees? Critics of the current fees policy argue that one of the world’s leading economies ought to be able to fund university tuition for free, and point to Germany as an exemplar. But German universities do charge administrative fees, and participation by young people is much lower than in this country.

Significantly, German institutions fare nowhere near as well in international league tables, with only one German institution in the world top 30, whereas there are three British institutions in the top 10, with Oxford currently in first place.

Part of the reason is that British universities are wellfunded. It was concern about funding and international competitiveness that led Tony Blair to back the controversial introduction of £3,000 fees in 2006.

The Scottish example, where tuition is free, is also not without difficulty because unlike in England the number of places is rationed to control costs and participation by the disadvantaged is falling.

The current policy is not without its problems. Previous Institute for Fiscal Studies (IFS) research evaluated the 2012 reform, introducing £9,000 fees, and found that it increased overall graduate contributions considerably, but actually reduced lifetime repayments for those in the bottom third of the graduate lifetime earnings distribution.

Since then, other changes have been regressive, notably the removal of maintenance grants (replaced with loans) and the freezing of the repayment threshold. Conservative higher education minister, Jo Johnson, pledged that he would look again “at the details of the student finance regime to ensure it remains fair and effective”. The most likely change is a reduction in the real interest rate applied to student debt.

More fundamental alternatives, such as fee cuts and teaching grants to universities, would reverse recent policy and increase deficit spending.

However, replacing lost fee income with teaching grants would allow government to target high-priority subjects or students, such as those from low-income households. But this would be fundamentally at odds with policies that have been in place since 2010 to encourage a market in higher education.

It remains to be seen whether the current policy will change fundamentally, but it seems that the Conservatives have been influenced by the perceived success of Labour’s policies. Another election before 2022 is a real possibility, and Labour policy, appealing to young voters, remains a threat to the Conservative share of the vote.

The Labour manifesto argued that “education should be free, and we will restore this principle”, and this seems laudable and worthy. But let’s consider the detail for a moment.

Firstly, there is a benefit to the individual from higher education. Free higher education for all, funded from general taxation, means that those with no prospect of family members benefitting from university study will pay for the experience not only of those who should derive substantial individual benefit from it, but who may also be from families able to pay.

Surprisingly, Labour policies benefit the rich more than most. The wider question then is what wouldn’t be done as a result of the decision to abolish fees. The Institute of Fiscal Studies estimated the cost in the short term, before considering those who don’t repay their loans, would add £11bn to the deficit.

Outside of the Labour manifesto was a comment by Jeremy Corbyn that he was “sympathetic” to cancelling existing student debt, at a probable cost of about £100bn.

The recently-retired UCAS chief executive, Mary Curnock Cook, has highlighted improvements in prior attainment as the biggest driver of better access to higher education. Spending the cost of scrapping tuition fees on better funding for schools and, especially, further education colleges, would do far more to increase the life chances of the most disadvantaged.

As the IFS notes, 16–18 education has been the big loser from education spending changes over the last 25 years, leaving spending per student at similar levels in real terms to those 30 years previously.

By comparison, total public spending is expected to be 93 per cent higher in 2020 than in 1990, and national income 77 per cent higher.

This long run, and continuing, squeeze on resources in 16–18 education poses significant challenges for the sector as a whole. But are there any votes in it, and will either major party address the issue?