Small offices, big TVs, and the politics of the review

Forget social media, broadcast news remains the largest window number 10 has on the nation. BBC and Sky are snapshots for public opinion. Political gossip is a conduit to Mr and Mrs Ordinary. Reporters interviewing reporters is taken as an indication of chat down at The Dog & Duck. And it makes Downing Street look reactive, defensive and paranoid.

Politicians tend to believe that they are only one policy away from winning or losing the electorate. It’s a remarkably unsophisticated understanding given that parties’ brands take years, even decades, to build. Manifestos may signal their values but rarely, if ever, shift the dial on their own. Jeremy Corbyn’s proposals, for all their good reviews from the left, came nowhere near to winning a working majority.

Small offices and big TVs explain the much trailed post-18 education and funding review announced this week. The Prime Minister promised it (or something like it) last September, after the Conservatives convinced themselves they had not secured a majority in the general election, in part, because Labour had committed to abolishing tuition fees and restoring maintenance grants.

Above all, political survival

The Prime Minister chose in her conference speech last year to stave off criticism within her own party by freezing tuition fees, and by spending an additional £2.3bn a year to raise the repayment threshold by £4,000. But four months have now gone by and ministers have now had to go further, and try to justify the sector needing what was billed as a “radical review”.

No wonder then that there has been frustration within higher education with prime ministerial waffle about “choice”, “diversity” and “competition” to create a “joined up system that works for everyone” which “is accessible to all”. We may ask – what’s the specific problem number 10 is trying to solve?

The truth is that at this point the government is not interested in the intricate policy detail. This is about political survival again, neutralising a Labour attack line and kicking any decisions beyond 29th March 2019, in the hope that the Prime Minister’s fortunes will change. She may well hope that the review’s interim report will give her policy meat at the autumn party conference, and the final report will offer palatable options at next spring’s Budget. All of this helps her build a strong enough policy platform for the next election to fight off other leadership contenders.

Theresa May – guerilla activist

We are seeing the Prime Minister pitching herself as a guerilla activist against her own higher education policy. This is a electoral tactic that has been used for decades in the United States: Frank Luntz’s idea that political messaging is fluid. It is not about what you say, he argues, but what people think and feel. Number 10 wants to tap into a deeper, visceral mood – a mood which drove the Brexit vote, and has seen the Conservatives fail to win a significant Commons majority since 1987.

The Prime Minister makes out that she has only just found out about her own government’s policy. And she says people are right to be angry that this ‘system’ is rigged against them, whether its housing, energy or education. She paints a picture that higher education is, more or less, fraudulent in the degrees they offer, leaving students with debt they will never pay off – a vested interest that must be broken.

And, as with stonewalling on reforming vice-chancellors’ pay, universities fall into this political trap when they argue the review will come up with nothing new.

Misunderstood policy is bad policy

The current student finance system was not sold as addressing decades of underinvestment or pumping new, long-term funding into higher education, as it might have been. It was wrapped up in the “age of austerity” – framed as cutting public spending and students not being able to rely on the state any more to pay for their education. This then created confused messaging, where the economy was continually described in terms of what happens when you do not pay off your debt – yet graduates owing a nominal £50,000-plus was fair and equitable.

In his book A University Education, former minister David Willetts pats himself on the back for designing a clever funding system – which cuts current spending, kicks the bill thirty years down the line and raises investment in universities by 25%. But he is clearly frustrated that this sleight of hand and triumph of wonkery is not well understood – for chapter after chapter, he comes up with new and different ways to recast it. He admits to sowing the seeds of this misunderstanding himself.

“The language of fees, [debt] and loans had already taken hold [by 2012]”, he writes. “It was how the structure we inherited was described. If we had tried to change it, we would have been in danger of having an official name and a separate colloquial description”

Smoke and mirrors

So the key line in the review’s terms of reference is that post-18 finance, needs to be “better communicated”. On the face of it, this is about giving clearer information to would-be students about how tuition and maintenance finance works, which the Treasury Select Committee recommended as well. But what it also showed was ministers no longer know how to explain their own policy. They know “debt”, “loans” and “fees” have become weaponised. They pay lip service to protecting the basic principles but no longer have the energy, or words, to defend the system.

Because the post-2012 student finance system is obscured by Treasury smoke and mirrors.

• We tell students to act as consumers paying for their tuition – when it is 100% free at the point of use and when not a single penny ever transfers from them to their own university.
• We pretend £9,250 “fee” bears some resemblance to the cost of a teaching a degree – rather than being a cost unit to make the government’s books stack up.
• We make out current taxpayers are subsidising universities, when it is based on a Treasury accountancy fiddle, magicking investment up, disguised as loans, to keep it off the balance sheet.
• What we call “loans” actually bear no relation to commercial borrowing. No one has to pay it off in full because graduates pay the same whether we “owe” £50,000, £500,000 or £5m.
• No one can explain why repayments are 9% above a income floor of £25,000 – why not 8% or 10%? Or why the interest rate is RPI plus 3%?
• What we call “debt” is nothing of the sort. It’s a tax – and no-one lies awake at night worrying about the income tax they will be paying in 30 years time.
• Universities are told to be accountable to individual students – yet, they know the consumer has no levers to force them to do it. No one can demand any cash back or withhold any payments.

As IFS’ boss Paul Johnson put it in The Times, it feels the “accounting rules tail [is] wagging the policy dog”. No wonder Labour’s option to cut away this obfuscation is superficially attractive.

Grasping the opportunity

Fairly or unfairly, the perception in Westminster and Whitehall is that higher education is too often out of touch – that in return for financial stability, institutions need to do more in building a high-skill workforce, raising productivity and generating growth. So it would be a massive missed opportunity if the review went through the motions at No.10’s beck and call

The sector needs to work hard turning the review from political posturing into worthwhile exercise with Treasury; across Whitehall; across the education world; private, voluntary and public sector; and yes even indeed, with the opposition.

• First, the government has a series of major vocational policies in play, often siloed, sometimes overlapping, where higher education needs to play a bigger role. There are plans for three million apprenticeship starts by 2020, degree apprenticeships, T-levels, and teacher and nurse recruitment, training and retention. And a host of of smaller initiatives: Institutes of Technology, National Colleges and Further Education Maths Centres of Excellence. This review should be about joining these dots. In this view it is notable that Alison Wolf, a long-time advocate for technical skills training, has a seat on the expert panel
• Second, there are clear fixes that need to be made to the post-2012 system. The IFS over the last 12 months and Treasury Select Committee last weekend set out a sensible to-do list, in particular on long-term affordability, interest rates, price-competition, cost of living, part-time and mature students. And the scheme needs to sold, promoted and marketed better – the comprehensive HEPI/HEA Student Academic Experience Survey last year found 78% of students accepted they should contribute towards their costs.
• And third, the review needs to win cross-party agreement about the big principles. How best should we balance the costs of higher education between the state, universities, private sector/industry and students? How do we weigh-up private benefit and public good? How do we balance public and private investment in higher education with further education?

These are not one-off questions – but ongoing political, economic and financial judgements, which need testing, evaluation and reaffirming. We cannot waste the chance to get this right.