Live: Labour’s higher education policy announcement



  • Live blog closed

    This live blog of the announcement has now finished.

    For the latest reactions and updates to the policy, see our latest piece here.

    9 years ago
  • Tonight’s response

    More reaction to Labour’s plans has surfaced this evening, ahead of tomorrow’s papers:

    The Mirror has ‘Labour’s £3k university tuition fee cut pledge gains massive backing from students and unis’ – read their story here.

    The Guardian has a new editorial – ‘beyond the bean counters’ – read here.

    Channel 4 has ‘dancing to the tune of a tuition fee cut’ here.

    The Financial Times (paywall) has Ed Miliband’s misplaced move on tuition fees here.

    And Martin Rowson for The Guardian has a typically wry cartoon illustrating the situation:

    rowson guardian fees cartoon

    9 years ago
  • Leading the bulletins

    The evening headlines are an absolutely essential part of the communication strategy for any political party. When you announce a big set-piece policy like this, you want it to boom through living rooms around the country as they settle in to their evening routines.

    Labour will be pleased with tonight’s coverage as their fees policy leads the evening bulletins. The more in-depth criticisms of the policy will likely follow in tomorrow’s papers, but for now they have done well to set the day’s political agenda and in so doing, ensured the media give it due prominence.

    bbc fees evening wonkhe

    BBC News, 6pm Friday 27th February 2015

    9 years ago
  • Returning to student number controls

    Earlier today on the live blog, I questioned whether student number controls would make a comeback under Labour – either to help pay for the lower fee (by cancelling the expansion) or helping control the system. I’ve now heard from multiple sources in the sector that have been briefed by Labour, that some form of SNCs are indeed likely to return under their new regime.

    It will probably be framed in a different way to old school SNCs, but the sector is now expecting to have to respond to measures that use student numbers to meet policy imperatives of a future Labour administration. For example places could be set aside in different ways to incentivise delivery of lower cost courses, accelerated degrees and provision delivered through FE.

    Indeed, FE may need particular help given that their previously much cheaper offer will now face downwards market pressure and so could struggle to compete with better-resourced HEIs. Labour also believes that more higher education should be delivered through further education colleges – particularly where this expands vocational education at a higher level.

    There’s no real detail about any of this of course, but all this gives us a better understanding of the character of a future Labour government’s approach to HE more broadly. I.e. not only do they want lower fees for the reasons Ed Miliband set out today, they also want what comes with increased public funding: a greater ability to shape higher (and further) education to meet their wider policy ambitions.

    9 years ago
  • IFS fees briefing

    The Institute for Fiscal Studies has just published an interesting briefing note on Labour’s fees plan:

    The reform to HE funding announced by Labour on 27th February would:

    • Leave university finances largely unaffected in the short run, but perhaps more susceptible to spending cuts in the longer run;
    • Benefit higher income graduates;
    • Leave the half of graduates with lower lifetime income largely unaffected;
    • Increase the incentive for those who expect to have high income in future not to participate in the loan system at all;
    • Boost “cash-in-pocket” for around half of students by up to a maximum of £400 per year;
    • Previous evidence suggests this reform will have a limited impact on full-time participation in HE, but might have a positive effect on part-time participation.

    The effects on the public finances of the HE reform by itself would be to:

    • Leave government debt largely unaffected in the short run, but higher in the long run;
    • Increase borrowing in the short term, by around £3.2 billion a year;
    • Reduce the uncertainty around the public cost of funding HE, by replacing some of the uncertain costs of loans with a certain cost of grants.

    When you account for the additional revenues Labour expects from the announced package of changes to the taxation of pensions the overall effect on the public finances would be to:

    • Reduce government debt in both the short and long run;
    • Leave government borrowing largely unaffected in the short run and lower in the long run.

    Read the note in full here.

    9 years ago
  • Questions of funding and regulation

    David Kernohan of Wonkhe’s Editorial Group asks some interesting funding and regulatory questions about the policy:

    1. OFFA – currently universities are allowed to charge up to £6k/year in fees, unless they have a plan approved by OFFA which would allow the maximum to go up to £9k. (currently all English public universities have a plan approved by OFFA). With a reduction of this total price from £9k to £6k – would the non-OFFA approved limit be £3k fees charged to students? Or would the OFFA approval apply to the directly public-funded component of university funding? Which leads us to…

    2. HEFCE – When funds are given by HEFCE they apply their “financial memorandum” (from last year replaced by the “memorandum of assurance and accountability” which links to the register of providers and makes up for the regulatory wasteland that is the bequest of our current government) to it – which commits the receiving institutions to doing certain things (data returns, subscription payments…) if they want to have the money.

    If the £2.7bn of direct public funding that replaces the lost fee income goes through HEFCE, this gives HEFCE a lot more power over what institutions do. Which is popular with people who like to see accountable spending of public funds, but would be less popular with people who run universities.

    The VC-friendly option would be to use this £2.7bn to replace the borrowing that the government does on behalf of the Student Finance (England) in order that it can pay what has been loaned to students to institutions. So the Student Finance (England) would still pay £9k (ish) a year per students to institutions directly (as now), but with a chunk of this coming from tax income rather than borrowing.

    Student Finance (England) don’t attach a financial memorandum to their payments to institutions, so the (less powerful) interim list-based arrangement would still suffice. Unless anyone in the next coalition manages to sort the HE Bill out and get it through parliament, something that David Willetts didn’t manage to do.

    David has further unanswered questions over at his blog here.

    9 years ago
  • “Labour’s tuition fee policy: not awful, but still pretty bad”

    Emran Mian, Wonkhe Editorial Group, Director of the Social Market Foundation and one of the key authors of the 2010 Browne Review has written a thoughtful piece in The New Statesman setting out the good and bad in Labour’s policy:

    Labour has said the policy will cost £2.7bn a year. It will fund that cost through changes to pension tax relief. But the money could have been used for something else. To put the sum in perspective, it is about twenty times what it costs to avoid dropping the benefits cap to £23,000 per year. Perhaps that example is slightly too remote from higher education, in which case let’s think about the ‘forgotten 50%’ that Labour used to talk about. These are the young people who don’t go to university. £2.7bn per year would be transformative for that group. Merely a sixth of that sum would pay for 200,000 higher level apprenticeships. However, Labour isn’t helping them, instead it’s helping those already fortunate enough to go to university.

    Read it in full here.


    9 years ago
  • Everything we know so far

    Continuing our regular Policy Watch series keeping the sector up to date with policy developments in and around HE, Emily Lupton looks at everything we know about Labour’s policy so far:

    “We’re going to reduce the debt on university students. We’re going to reduce the debt on taxpayers. From September of next year, the next Labour government will reduce tuition fees from £9,000 to £6,000.” Early this afternoon, Ed Miliband finally announced Labour’s plan to cut university tuition fees by a third.

    We’ll keep the piece up to date as the story develops. Read it in full here.

    9 years ago
  • Chuka Umunna sets out the policy

    In a slightly jovial, almost passive-agressive exchange with Andrew Neil, Labour’s Shadow Business Secretary gave an explanation of the policy and how it has come about on the Daily Politics earlier. Worth a watch:

    9 years ago
  • NUS response

    The National Union of Students has set out its response to Labour’s plans. It welcomes it as a ‘step in the right direction’ but they are unable to go too far in support of the policy as their ultimate goal is still to phase out tuition fees altogether. Accepting £6,000 would cause internal political difficulty for NUS leaders who have to respect their members’ wishes to campaign for free higher education.

    Naturally they welcome to the increase in maintenance grant which Ed Miliband basically credited NUS for today in his Q&A saying it was down to theirs and others lobbying to ensure that the party did something on support at the same time as fees. So whilst fees is as ever dicy politics for NUS, they’re increasingly influential on the sorts of things that affect students during their study e.g. support and cost of living.

    ‘The current model of university tuition fees is totally unsustainable and these new proposals begin to address this, so NUS strongly welcomes these commitments as a step in the right direction.

    ‘Reintroducing substantial public funding and addressing student debt is progress to what we currently have. The inclusion of a significant increase of maintenance grants will help to address cost of living for the most disadvantaged students, which is frankly nearing crisis point.

    ‘Higher education is a public good, which should be fully publically funded, and today we reiterate our firm call to Labour and all parties to work with us to achieve this.’

    National Union of Students (NUS) is supportive of efforts to move away from the current government’s failed £9,000 fees system, which it has always maintained is a bad deal for students, for tax-payers and for the sector.

    NUS has continuously warned that forcing debt onto students as a way of funding universities is a failed experiment, and that public trust in higher education funding now urgently needed to be rebuilt. In the run up to the general election, NUS is asking the government to phase out tuition fees and restore public funding to universities as part of its General Election manifesto.

    9 years ago
  • A sigh of relief?

    Alistair Jarvis of Universities UK has written a new piece elsewhere on Wonkhe. He shows how the worst fears of the sector have not been realised today, but warns of challenges ahead with the 6k fee policy:

    Labour have devised a set of policies for higher education that avoid realising the very worst fears of universities, however significant questions over the long-term viability of these policies remain. A commitment to increased public funding for universities may be a promise that comes under intense pressure given all the other pressures on the public purse.

    Read the article in full here.

    9 years ago
  • The Russell Group response

    The Russell Group have given a fairly neutral response to the plan to lower fees to 6k.

    “We welcome the Labour Party’s stated recognition of the importance of higher education and the promise that Government funding will replace fully income lost from a cut in fees.  We also welcome the increase in maintenance support for needier students.

    “However, we would be placed into a position of having to trust that any future government will provide sustainable funding for our universities and not divert resources to other priorities. We therefore remain cautious because the proposed system makes us more dependent on direct Government funding which might be vulnerable to future cuts – even if hypothecated.

    A fairly standard line they use – i.e. funding Russell Group institutions is too important a business to be left to the politicians…

    9 years ago
  • UA reaction

    University Alliance is ‘reassured’ which makes them on the policy in my books – cooler than M+ but warmer than UUK – which is sounds about right for the group:

    “We are reassured that what Labour have announced today demonstrates a strong commitment to maintaining investment in higher education and in making sure students are able to access financial support through increased maintenance loans. This is critical to securing the future of higher education in the UK at a time when it is most needed to deliver UK growth.

    Notable absences so far – NUS and the Russell Group as they both negotiate their lines internally. It can be tough to balance all your interests and formulate the right language. You can never please all the people all of the time.

    9 years ago
  • Warm reaction

    Perhaps the warmest response from the sector to Labour’s plans has come from vice chancellor of De Montfort University, Dominic Shellard who is ‘very pleased’ – representing considerably warmer language than that used in mission group and sector body press releases.

    I wonder if other VCs will ‘break ranks’ in a similar way…

    9 years ago
  • Whither the graduate tax?

    One of the interesting things about today’s announcement on fees is the lack of talk of graduate taxes – the preferred option of Umunna, Byrne (they’ve said so recently several times) and Miliband himself – he campaigned on the graduate tax in the election for the Labour leadership.

    One option available to them today was to announce 6k but say that the longer-term ambition was for a graduate tax (e.g. by the end of the next Parliament). Indeed, there had been briefing to the press in recent weeks that the fees announcement would include the promise of a ‘graduate tax commission’ to report in the next Parliament.

    However I understand that there were fears that including this policy would make it harder to justify the lower fee position as the two policies may not be consistent. Additionally, there were concerns about talking about the graduate tax without being able to promise anything concrete – whereas the rest of today’s announcements were all concrete promises. Finally, on the face of it, a graduate tax would add to the deficit as the whole HE budget would be scored against it – potentially undermining economic credibility. Even without the clear promise of a graduate tax – just using it in the language – Conservatives would be able to add a cool £10bn or so to their ‘scorecard’ of Labour’s spending pledges and this would have distracted significantly from the eye-catching reduction of the headline fee.

    But Ed Miliband and other key members of the Shadow Cabinet are said to still believe that a graduate tax is the ultimate goal for the system overall. So if Labour win, and after the dust settles on the 6k policy, I’d expect another serious attempt to look at the graduate tax. Particularly as 6k doesn’t fully answer some of the party’s criticisms of the ‘sustainability’ of the system – which tearing up and starting again (with a view to introducing a graduate tax) might yet warrant.

    9 years ago
  • Five points about Labour’s 6k policy

    Labour have published a sort of Frequently Asked Questions about their plans to lower fees to £6,000:

    1. Raising tuition fees to £9,000 has been bad for students and bad for taxpayers The decision by the Tories and Lib Dems to increase tuition fees to £9,000 means that the average student will now graduate with £44,000 of debt. That’s bad for them, because they have tens of thousands of pounds of debt hanging over them for decades – but it’s bad for the taxpayer too, because almost three quarters of students will never pay their loan back in full, and the cost of writing it off has to be met by the Government. In fact, government forecasts show that the current student fee system is set to add £281 billion to the national debt by 2030-31.

    2. Labour’s plan will be fairer to students and taxpayers Cutting tuition fees from £9,000 to £6,000 will reduce average graduate debt by nearly £9,000. And because our plan is fully funded, it means £40 billion less government debt by 2030-31, or over £10 billion less government debt over the next Parliament. We will also help students from lower and middle-income families by increasing student grants by £400, so that the full grant goes up from around £3,400 to around £3,800. More than half of students will benefit. We will pay for the grant increase by asking the highest earning graduates to pay more: increasing the interest rate on the loan from 3 to 4 per cent for those earning over £41,000. This will make the overall system of repayment fairer, but all students will be better off overall as a result of our plan – with less debt, and less to repay.

    3. Students who are currently in their first year at university will benefit from Labour’s plan We will cut fees to £6,000 from September 2016. That means that students who are now in their first year at university will see their fees capped at £6,000 in their third year. Students who start university this autumn will see their fees capped at £6,000 from their second year onwards. And students who start in 2016 will see their fees capped at £6,000 from the start.

    4. Universities will not lose out Our plan is fully funded, so we will increase the teaching grant universities receive by the same amount that their fee income from English students falls – around £2.7 billion.

    5. Labour’s plan is fully funded by restricting Pension Tax Relief for those on the highest incomes At the moment, people with incomes over £150,000 get tax relief on pension contributions at a rate of 45 per cent – more than twice that of basic rate taxpayers. This means that although they are only the top 1 per cent of taxpayers, they receive 7 per cent of all Pension Tax Relief. So we will make the system fairer by restricting Pension Tax Relief by £2.9 billion for those on the highest incomes. We will reduce the rate of relief for those with incomes of over £150,000 to 20 per cent – the same as basic rate taxpayers. And we will reduce the annual and lifetime allowances to cap the amount that people can put into their pensions tax free: £30,000 a year, or £1 million across a lifetime. This is far more than most people can ever afford to put into their pension pots.

    9 years ago
  • Will number controls return?

    Student number controls rarely make headlines and so I suspect we’re not going to hear much about them today. But one of the unanswered questions about the Labour policy is whether they will re-introduce SNCs either to help fund the policy (by cancelling the expansion) or control it – or indeed both.

    It looks to me that Labour is keeping its powder dry on this – as SNC is exactly the sort of detail that is hard to finesse in opposition – and precisely the sort of thing you’d want to have in the mix when it comes to the actual delivery of the policy in government. We’re promised more detail about the wider funding plans before the election, and so it may yet come.

    But if we don’t hear too much about this in the coming weeks, I think its safe to assume that SNCs could well make a comeback under Labour.

    9 years ago
  • UUK Responds

    Universities UK has responded, rather cooly to the announcement. They maintain their concern about bridging the funding gap which I suspect will continue to be a concern right up until the day they see the cash in their accounts. They are also unhappy that there is now greater uncertainty in the medium-term.

    But they are not coming out fighting today and could have used far stronger language. Individual VCs will have their say across the airwaves, but UUK is holding its fire – I suspect because it knows there’s lots to play for as the policy gets designed and delivered if Labour wins in May.

    Professor Sir Christopher Snowden, President of Universities UK and Vice-Chancellor of the University of Surrey, said: “Cutting the fees cap from £9,000 to £6,000 could create a c£10bn funding gap over the next parliament. Such a shortfall, if not met in full from other sources of public finance, could cause significant damage to the economy, to social mobility, to student choice, and to our universities. For universities, it is a funding question, not a fee question.

    “Universities will welcome the assurance that the balance in funding will be made up in full and will welcome the increased support for student living costs. It will go some way to help reassure universities that a future Labour Government would continue to provide a stable funding environment in the next parliament.

    “Overall funding levels must be maintained over the long-term to allow universities to continue to deliver a high-quality, world-leading experience for students. This package of policy proposals requires an additional c£3.1bn of new public funding per year for universities. Concerns will remain that, given the many other pressing demands on public funding, the long-term feasibility of such a promise may be difficult. The policy will make it more challenging to secure the increased public investment in other priorities, such as research, innovation, and social mobility.”

    9 years ago
  • Other providers

    FE expert Mick Fletcher makes a good point on Twitter:

    It’s true that downward pressure on fees may impact on FE providers. One of the possible unintended consequences that will come to light in the coming period.

    And what about the alternative providers in HE? Currently they are already capped at £6,000. Will they finally be about to get the ‘level playing field’ they have been after for so long, or will their upper fee limit also be forced down?

    9 years ago
  • More reaction

    Million Plus have reacted positively to the announcement:

    Professor Michael Gunn, Chair of the university think-tank million+ and Vice-Chancellor of Staffordshire University has welcomed the announcement by the Labour Party that it would reduce fees from £9000 to £6000 and fully fund universities for the lifetime of the next Parliament.

    Michael Gunn was also a signatory of the VC’s letter a couple of weeks ago that urged Labour not to lower fees.

    9 years ago
  • Zero Based Review

    Labour have now published their Zero Based review of higher education funding which contains lots more detail. Download the review.

    9 years ago
  • Red lines

    Miliband has said the the 6k policy is a ‘red line’ in any possible coalition negotiations. This is a very clear promise that he’s completely locking in, going even further than the Lib Dem ‘pledge’ pre 2010 which never talked about possible coalitions and possible compromise – so if Labour are in power after May, this will happen.

    9 years ago
  • Miliband’s speech

    Relevant text from the speech:

    And today I want to set out one key part of our pledge to young people.

    There are those who say that the current tuition fee regime is not so bad.

    Let me tell you about that system.

    The average graduate is leaving university with more than £44,000 of debt.

    That’s far more than the average income in the country.

    Three quarters of young people won’t be able to pay off that debt even as they head towards retirement.

    None of my generation, that of Nick Clegg and David Cameron too, had to begin their adult life with this sort of debt.

    I think of a 21 year old like lots of you, about to start their working life.

    Over £40,000 worth of debt.

    Harder to plan for the future.

    Harder to think about getting a mortgage.

    And for parents, grandparents, I know that debt feels like such a worry, a burden, a dead-weight.

    If you’ve got two kids at university, you think about them being loaded down with almost £100,000 worth of debt.

    Now you might think that having trebled fees for students, at least one virtue of this system was that it was saving money for the taxpayer.

    Well, you would be wrong.

    Today we are publishing our Zero Based Review into the current tuition fees system.

    Its findings are stark.

    It reveals beyond doubt that the scourge of debt from tuition fees is not only holding back our young people, it is a burden on our country.

    The government’s tuition system will have added an extra £16 billion more than predicted to public debt by 2020.

    If left unchanged the whole system will have added £281 billion of debt by 2030.

    So more debt for students.

    And more debt for the taxpayer.

    This will go down as one of the most expensive broken promises in history.

    And they call that a great success.

    We’re going to change it.

    We’re going to reduce the debt on university students.

    We’re going to reduce the debt on taxpayers.

    From September of next year, the next Labour government will reduce tuition fees from £9,000 to £6,000.

    Meeting our obligations to the next generation.

    It will benefit those starting courses next year.

    It will benefit those already at university.

    The average reduction in the debt will be around £9,000 per student.

    Higher for courses longer than three years.

    And the national debt, the burden on taxpayers, will be cut by £40 billion by 2030.

    We’re going to clear up the mess of the tuition fees system left by the Conservatives and the Liberal Democrats.

    And these changes are fully funded: protecting the universities so they can continue to offer the best education for the next generation.

    Let me explain how.

    Those with incomes over £150,000 currently get pensions tax relief at more than twice the rate of basic rate taxpayers.

    So Labour today confirms our previously announced policy that people with incomes over £150,000 will get tax relief at 20 per cent: the same rate as basic rate taxpayers.

    And we will continue this government’s policy of reducing the annual allowance and lifetime limit that caps the amount people can put into their pensions tax free.

    We will reduce the lifetime allowance for tax-free savings to £1million: still 25 times higher than the average defined contribution pension.

    And we will reduce the annual allowance for what you can save tax free in your pension to £30,000: still nearly ten times higher than the average pension contribution.

    These are fair choices.
    Fair choices that allow a better future for our young people.

    And a better future for Britain.

    And we will do more.

    We won’t just cut the debts of students.

    We want to make it easier for students from all backgrounds to get through their studies.

    So for those with family incomes up to £42,000 we will raise the maximum maintenance grant by £400 a year from September 2016.

    Now, I know some people will say that cutting fees is the wrong choice.

    That university benefits only a few.

    Or that the current system isn’t broken.

    Or that Britain can’t afford it.

    They are dead wrong.

    Britain needs the best educated young people in the world.

    Britain mustn’t send our young people off into life saddled with unsustainable debt.

    Britain mustn’t penalise the young, if we’re going to prosper in the future.

    Our economy and our country can’t afford to waste the talent of any young person.

    This is a better plan for Britain.

    A better plan for our young people.

    And there’s one other thing.

    In our politics we must restore people’s faith.

    Not further undermine it.

    This is an issue we can’t ignore.

    Nick Clegg made his promise on tuition fees.

    He broke his promise on tuition fees.

    It has left a whole generation doubting politics – doubting anyone can be believed or trusted.

    Let me say to Britain’s young people:

    I made you a promise on tuition fees.

    I will keep my promise.

    I don’t simply want to build your faith in Labour.

    I want to restore your faith that change can be believed.

    9 years ago
  • In a Q&A Miliband asked on transition to lower fees:

    The policy will be:

    “even for people that have begun their course before 2016” these students will “get the benefit of the lower fee – if you re a 2nd year in 2016, your fee will be 6k not 9k.”

    So this clears up the questions about demand and timing – Labour hope that this will ensure that applicants do not defer en masse this year.


    9 years ago
  • Timing and demand

    Labour has stated that the £6,000 policy will come in to force for 2016. A number of people have pointed out that this may encourage 2015 applicants to defer for a year which could be a serious problem for the system.

    However I understand in the detail (still pending) there is a package for the 2015 cohort – perhaps by writing off difference between 6 and 9 in their final year – or similar. It is hoped that this will offset the problems with demand.

    9 years ago
  • Reaction

    UCU are first out of the gate broadly welcoming the policy:

    Commenting on Ed Miliband’s announcement to cut tuition fees to a maximum of £6,000 a year and raise the level of maintenance grant available to students, the University and College Union (UCU) said it welcomed any reduction in the cost of accessing higher education. However, it said that what students and staff really need is a long-term funding solution for universities which allows all who would benefit to go.

    9 years ago
  • On pensions, those earning more than £150,000 a year will under the plans get the same relief as basic-rate taxpayers in future, rather than the 40% they enjoy at the moment. This will raise substantial sums to fund the lowering of tuition fees.

    There’s now a Q&A with Miliband – watch here.

    9 years ago
  • Coverage

    BBC have cut away from Leeds, but Sky are still broadcasting – Ed Balls is now up to give more detail of the policy. Watch here.

    9 years ago
  • Echoing the debates on fees over the last few years, Miliband makes a bold claim: “Let me say this directly to young people. I made you a promise on tuition fees, I will keep my promise. I want to restore your faith in politics”.

    There’s no backing away from this policy if Labour are in power after May.

    9 years ago
  • The policy

    Ed Miliband has announced the following in his speech this afternoon in Leeds:

    – Under Labour, the fee cap will reduce from 9k to 6k

    – It will be introduced in 2016

    – Maintenance grant raised by £400 per year for those earning up to £42k

    – “Fully funded’ by taxing wealthier pensions

    More to follow.

    9 years ago
  • The pledge

    Labour has just emailed all on its email list the party’s £6,000 pledge. So it’s definitely happening then…

    labour fees pledge

    9 years ago
  • BBC Coverage

    You can watch Ed Miliband’s speech from 12.00 on BBC News here.

    9 years ago
  • What are the implications of a £6,000 tuition fee?

    Gavan Conlon from London Economics writes for us:

    To understand the potential effects,we first need to understand what would happen if nothing else is done.

    • For students, reducing the tuition fee to £6,000 would benefit many students (as those student who are repaying would end up paying less interest), but would in particular benefit the highest earning graduates as these are the graduates that only ever repay the element of loan between £6,000 and £9,000. So it would appear to benefit the ‘wrong’ types of graduate to a large extent. The total benefit for a cohort of students would be in the region of £650 million.
    • For Higher Education Institutions, they would see a reduction in income – though this would be less than the difference between £6,000 and £9,000 (because some of this is handed back to students in the form of bursaries as part of Access agreement with the universities regulator). HEIs would be approximately £1.65 billion per cohort worse off.
    • The Government would see a benefit as the RAB charge – or the proportion of the loan written off – would decline by approximately 4 percentage points (both the fee loan and the maintenance loan!). This benefit stands at approximately £1 billion per cohort.

     However, there are clearly some winners and losers. How can the system be amended to remedy these impacts?

    • To make sure HEIs are no worse off than before, an adjustment would need to be made to compensate HEIs for the loss in tuition fee income, and this could be achieved by raising the level of the HEFCE administered Teaching Grant (by approximately £1,700 per FT student per annum)!
    • However, at this point, the compensating income from the Government would push them in into the red (to the extent of £650 million (or the initial benefit to students/graduates)).

    So how does the Government ensure the highest earning graduates don’t receive the windfall – but average graduates see some benefit of fee reductions?

    • If the interest charged on the highest earning graduates is increased (from 3% currently to something closer to 4.8%), the effect will be to recoup the subsidy that is effectively handed to the highest earning graduates without impacting average graduates. Adopting this approach, the RAB declines by another 8 percentage points!

    All in all, a lot of moving money around the table and tinkering with the repayment system; however, because of the reduction in the fee, the model incorporates the fact that there are now additional students (both part time and full time), so there are clear benefits in real terms. This last point is often forgotten. The full analysis was undertaken for Million+ and is available (here)

    9 years ago
  • Meanwhile, elsewhere…

    Richard Atkins of the Association of Colleges makes an important point on Twitter:

    This is the news that there could be up to a 24 per cent cut in adult education – potentially devastating for students and providers alike. As ever, a focus just on HE feels too narrow on every count.

    9 years ago
  • While you wait for the announcement, you could do far worse than read Wonkhe Editorial Group member Andrew McGettigan in the London Review of Books with an in-depth and very timely piece on HE finance and the sale of student loans ‘Cash Today’:

    But if the government – any government – is to achieve the desired reduction in the deficit, it will need to look beyond tax and spend. The most obvious means of raising cash by other means is a sale of assets. Here, the clear candidate is the student loan book. A million students take out loans every year.

    Read the piece in full here.


    9 years ago
  • What do we know so far?

    Here is what we know of the policy:

    – Labour is going to reduce the cap on fees for full time higher education undergraduates from £9,000 to £6,000.

    – The loss in income to universities (roughly £2bn per year) will be replaced by cutting tax relief to pensioners in some way (there are differing accounts this morning of the details so far).

    – We think this will be implemented for the academic year beginning September 2016.

    – To offset problems with demand in the system (e.g 2015 cohort all deferring to next year) Labour will promise something to this year’s incoming students e.g. writing off the different between 6 and 9 for their final year across the cohort.

    – There has been frenetic lobbying to attach this package to action on maintenance and cost of living for students – but nothing of this so far has leaked out so far.

    9 years ago
  • Vince Cable has been across the airwaves this morning pre-emptively attacking Labour’s 6k fees plan calling it ‘financially illiterate’. Although he is the Secretary of State responsible for the £9,000, he cuts an unlikely figure attacking Labour. His party’s backtrack on their pledge not to raise tuition fees at the last election is significantly responsible for the collapse in the party’s support since 2010. I suspect that Cable talking about fees will serve to remind people of this fact which cannot be good for the Liberal Democrats.

    However what he does do by his presence in the debate is serve as a cautionary tale. I.e. look what happens when you promise something on fees and don’t deliver – you could end up just like me. 

    The wonks will make a judgement about financial literacy after we’ve seen the detail of the policy.


    9 years ago
  • There’s a lot of coverage of tuition fees in today’s press. Essential reading so far:

    Philip Collins in The Times – ‘Labour’s dumbest idea is cutting tuition fees’ – the article is significant because Collins used to be a Labour adviser. It’s been heavily circulated last night and this morning around the sector and has proven to be a lightening rod for much of the ill-feeling and concern about the policy. Read here (paywall).

    Nick Pearce of IPPR has an excellent blog ‘Student politics: The future of tuition fees and higher education debt. Read here.

    Our own Graeme Wise has an interesting piece on the mooted plan to raid pensioner tax relief to pay for the 6k policy, finding it both progressive and with the potential to roll back the market in HE. Read here.


    The Guardian reports on dissent in the party about the fees policy.

    The Indy reports on some the known detail of the policy i.e. that most of the estimated £2bn cost would be found by reducing tax relief on pension contributions.

    The Daily Telegraph writes on business with the 6k fees plan.

    The Daily Mail is on the attack calling the plans ‘financially illiterate’ – a phrase you’ll hear used a lot today by the policy’s detractors.


    9 years ago
  • Welcome

    Good morning, It’s Mark Leach here running the live blog of Labour’s long-awaiting higher education funding policy that they will take to the country at the General Election, in 69 days.

    Overnight briefing has been frenetic, with portions of Ed Miliband’s speech briefed to the press already. Miliband is due to speak at around 12pm today and is expected to say:

    “What has happened over the last five years is more than just a betrayal of election promises, it is a betrayal of an entire generation: a betrayal from their first steps to the time when they stride into the world of work; a betrayal from nursery to school, from college to university, a betrayal to the jobs or homes they hope to have afterwards – and even on their ability to vote.”

    We’ll follow the announcement, and round up the reaction on the live blog through the day.

    9 years ago