Labour higher education funding policy 101

Today universities start a public fightback against the potential Labour Party plan to reduce fees from £9,000 to £6,000. This is a campaign that has been brewing for a long time – in fact since September 2011 at Labour Party Conference, when Ed Miliband announced his intention to reduce fees to £6,000 and plug the gap in funding via the teaching grant. The campaign begins with a letter in The Times front page story to go along with it.

Capitalising on the popular anger of £9,000 fees at the time, this policy was announced as something the party would do ‘now’ if the Coalition were to fall apart and Labour come to power in a snap election. It was never promised to be made policy after the coming general election, and since the Coalition never fell apart, it was put in the freezer while the party worked out its position on everything else. Ed Balls then announced that Labour would inherit Coalition spending plans for 2015/16 – which people assumed meant no big new spending on things like lowering fees.

And then confusion reigned for three years about the true position. The media wrote up Labour policy as being for a ‘graduate tax’ or ‘promising lower fees after the election’ – rarely ‘there is no policy’ (which would have been closer to the truth). And at the same time, an expectation grew up in the Labour ranks – never properly challenged – that the real aim was a graduate tax. Ed Miliband promised a graduate tax in his campaign to be Labour leader in 2010 – as did Ed Balls – although they were hardly central flanks of their platforms. In fact this policy is likely to have appeared in their manifestos thanks to the clever politicking by leading Labour Student activists in NUS at the time, who were pushing their wider campaign to introduce a graduate tax and were deeply involved in the various leadership campaigns. The policy bidding war at the time ensured that the Labour leadership contenders picked up the idea. After all, it sounded pretty good and was a neat alternative to the debates at the time which were all about ‘fees fees fees’.

But critically, it was never a deeply-held conviction – particularly in Labour terms where there are camps that would literally go to wall defending different pots of public spending and mechanisms for distributing it. Even after the first £6,000 fees announcement – some wooly and ill-defined briefing lines and lack of internal understanding of the position, ensured that shadow cabinet members would give varying accounts of the policy – usually that it was some version of a graduate tax. Although it’s unlikely they could have given a coherent account of how this worked, if pushed. This allowed an expectation to grow up amongst some key graduate tax supporting backbenchers that the idea was still alive – which they clung on to and repeated as much as possible.

But on a cynical level – one of the benefits of announcing a ‘graduate tax’ is that it can mean anything you like and be structured in almost any way to suit. Our current funding system could be billed that way if the politics allowed it. The ‘graduate tax’ in this instance just becomes the holy grail of HE funding policy – no nasty business about fee levels and just some form of ‘progressive’ offer for anyone. Details pending.

But the official position was still ‘£6,000 for now if we are in government’. This was never satisfactory for the sector, media or indeed the wider Labour Party. The HE sector wisely kept its powder dry back in 2011 as nothing was set in stone back then and no one knew if the Coalition would really last the distance. It has since been lobbying in private for the party to drop the idea – principally concerned that the funding gap between 6k and 9k could not be easily bridged. The mainstream media has been generally confused about the position (and who could blame them). And you got a different answer from Labour depending on who you spoke to.

This has been the state of affairs up until now, when as we count the time to the General Election in days and weeks, it has become very difficult to allow the Labour Party’s HE funding position to stay in deep freeze. The Universities UK Board has taken the unusual step of bringing their private lobbying out in to the public with a letter in today’s Times which is accompanied by a front page story. It is unusual given the political nature of the current state of affairs – they are not coming out against established government policy (which they do a fair amount of), but using their collective platform to intervene in high politics during a General Election campaign. For a sector that prefers to engage behind closed doors and conduct its politics away from the limelight (it’s all rather unseemly after all) – this is quite a spectacle and a serious statement that underlines the strength of feeling about this issue. They have also calculated that this intervention is worth the risk of appearing self-interested in difficult economic times.

I worked as a Labour adviser on higher education in 2012 and 2013, and was on the other side of much lobbying on fees from every part of HE. The nervousness about the position was apparent then, and I had expected things to bubble up to the surface sooner. But I never imagined that we’d be without clarity of the position this close to the election. Although we’ve been gradually understanding more about the problems with the current system since 2010 – the basic facts have not changed, meaning that this was always more a matter of political judgement. And every day that judgement was delayed, Labour’s options were limited further.

Back to the graduate tax – the rhetoric around this has returned in recent days with shadow business secretary Chuka Umunna repeating that the the graduate tax was his ‘ultimate’ policy – both in the Northern Echo, Daily Mail and Sunday Times. At the same time there has been some slightly muddled briefing to The Spectator and other places that suggested Labour would lower fees to 6k for STEM courses which seems improbable given the high cost implications. Ed Miliband has also gone out of his way recently to highlight the £9,000 fees as an example of how the Coalition are selling out young people, amping up expectations of Labour action in this area further. So UUK – rightly – sniffed that something was about to give and timed their intervention for maximum damage.

The 6k STEM idea seems to me to be a completely red herring, and possibly a simple misunderstanding by the journalists that wrote it up. Various different parts of Labour have trailed ideas about lower cost, ‘practical’, live at home degrees, possibly without maintenance – as a cheaper way of providing HE, linking to regional growth strategies, business, further education etc. This would also be a way of having some form of an offer of 6k fees without wider serious implications for the sector. It’s possible the STEM lines were a corruption of some of these ideas.

So where is Labour now? I’ve read every article and public statement about Labour and higher education funding policy since 2010 and indeed have been directly involved with the policy myself in my time as a Labour adviser. I’ve received (and made) every argument about 6k/9k fees you can imagine – and many I bet you can’t. Reading in to what has been said in recent days, it seems clear that costing a £6,000 fee for all policy remains difficult given the wider climate – new money needs to be found which is a problem politically (Labour cares more about other parts of public spending) and economicly (there’s no money left).

But too much has now been said for Labour not to take some sort of HE funding action. They genuinely don’t want to cause funding problems for the sector and the original 6k policy always assumed a straight swap in funding through the teaching grant which could have been absorbed by the sector (although inflation has made this harder). And the case that 6k fees would benefit rich, white, middle-class men is hard to argue with. And they need to win a General Election which has economic credibility at its heart. The policy costs around £2bn a year (assuming you didn’t want to take that much out of HE as it stands – which no one does).

It is also possible that the public row that started today will have the effect of hardening the Labour position. A lot of people won’t have known about the 6k fee plan until universities came out against it so strongly. There will be those in the Labour camp this morning that say given all the attention; ‘well we have to make this work somehow’ – at least as an interim solution for a year or two – which would require a pushback against the vice chancellors. Watch out for lines about their high salaries being banded around.

But if the numbers really can’t be made to work, I suspect that some version of the following will be announced in coming weeks ahead of the election:

– Not being able to reduce fees to £6,000 for everyone, they will announce a new £6,000 degree which includes some form of live-at-home element, certainly vocational, linked to some key growth priorities. It will be billed as lower-cost higher education and some incentives put in place to get providers (including FECs) to take it up (eg through number controls), and will likely be cost-neutral (or close) to implement this/next year. This will allow the party to campaign with a 6k fee offer that chimes with their wider priorities on skills without opening up the pandoras box of the full-time undergraduate fees cap. (I predict there will ultimately be little demand but that doesn’t matter – it’s the politics remember!)

– A major review to look at the sustainability of the HE funding system directed at finding a way of bringing in a graduate tax by the end of the next parliament (what I call the ‘get out of jail free card’). Under current rules, this would mean the entire cost of the system would be scored against the deficit so the language needs to be carefully formulated to ensure that the details are all ‘pending the review’, and Treasury dealing with the accounting rules etc. Not ‘bringing in new taxes’, and scant substance – making it hard to seriously unpick. At the same time, given it won’t be based on much conviction apart from a broad desire to be ‘progressive’ and ensure sustainability of the system, the details are all to play for – the HE sector and others will have an opportunity to help design something that they can live with.

Some version of the above will keep the HE sector broadly happy, satisfy Labour’s need to have an HE offer at this election – and one that doesn’t need to stand up to impossibly scrutiny before they take the reigns of the Treasury. It’s not earth-shattering, but with every day that passes, options are limited further.