More notes from Scandinavia: who really pays?

During a recent study trip to Scandinavia, I was struck by the clarity of their HE funding model, leading me to question who really pays for higher education in England?

I am not proposing a Nordic-style free education, but for action on UK funding that goes beyond tinkering around the edges of the current tuition fee model. It’s a call to be brave enough to change the very ideology of HE funding and to resolve some of the conflict and confusion between multiple funders.

Who’s funding what?

Denmark, Sweden and Norway all have funding systems where the state is the primary funder of higher education. Denmark offers free tuition and grants. Sweden and Norway offer free tuition and a combination of grants and loans. Denmark even offers post-study grants to support graduates’ transition from studying into professional life. All three countries offer free tuition to EU students (quick kids, a final chance for a free Scandi education!) and in some cases, support for students from anywhere in the world.

Some would call this free education. Clearly, it’s not. It just moves the burden of cost away from the student and onto the state. Someone’s always paying and in this case, it’s from the public purse, by virtue of a higher income tax (commonly 47%+) , higher VAT (up to 25%), and high corporation tax (up to 24%). By contrast, the UK generally enjoys lower taxes and passes most (though by no means all) of the cost of university funding to students through debt in the form of fees and loans. The 2018 balance for England is 53% paid by graduates and the remaining 47% by taxpayers, whereas up to 2017 66% was paid by graduates.

University funding across the world will always be a mixture state and private funding. Scandinavian countries are at one end of that scale, with the UK and the USA at the other. 2014 OECD figures (Fig B3.1 in Education at a glance 2017 ) show the share of public expenditure on higher education versus private expenditure, a pattern that will still largely be true today. Norway has a whopping 96% of education expenditure from the public purse and 4% from private, while the UK has 28% from public funding and 72% from private sources. The UK has made clear choices along the line about how to fund education, to move the burden away from the state, onto the individual, and thus to maintain lower taxation.

While the UK funding model pushes significant debt burdens onto students, it also creates more money in the system per capita. This allows investment in broader aspects of student life and student support than might commonly be provided in the Scandinavian system. Be it subsidised sport, a free campus bus, investment into buildings or an institutional counselling service – these are features of UK University expenditure not commonly seen in Scandinavia.  It is often these wider “student lifestyle” investments which students are demanding and universities are responding to. But, this perhaps contrasts with the wider public and state expectations of what UK taxpayers should contribute to. The public perhaps feels that state funding for universities should, for example, only go into particular types of course, or research into specific medicines – rather than subsidised buses, shinier buildings or sports club funding. In other words, assessments of “value for money” and spending priorities differ between students and taxpayers. The state feels that it makes huge investments of public tax into education, while students simultaneously and acutely feel the current debt burden of £27,750 for undergraduate tuition (before they consider their living costs or interest).

There is a fundamental clash between the expectations of taxpayers who subsidise state-education, and those of tuition-fee paying students. Taxpayers’ value judgements are based on very different priorities to the “consumer rights” judgements of students. In this context, who is the best arbitrator of value for money?

You need my money too much for me to be insulted

The ongoing debate about freedom of speech highlights the tension well. On the one hand various MP’s and journalists ask that public investment into HE requires that it serves the wider public good including plurality of debate. It has been suggested by the Department for Education that, as a condition of registration to the OfS, publicly-funded universities must show their governance is consistent with the principles of free speech. This is in stark contrast to some students arguing that as a fee-paying student they should be able to expect to practice freedoms of protest and should not have to “turn a blind eye” to opinions that they consider offensive. An example of this I found on Twitter, where @aaaaaaamara had a tweet chain on the subject including this one;

I pay too much money for someone to come to where I study, where I live, where I’ve paid money to come to, and to insult me or my existence or my beliefs. When university was free, yes debates like that could happen, however, on becoming a customer of the university’s business. The customer needs to be comfortable otherwise they take their business elsewhere. You need my money too much for me to stand here and be insulted. That is not an added extra I’m paying for.

Where’s the space for student voices in industrial disputes?

Similarly, this year’s industrial action over pensions begs the question of whether students have a stake in how university funding is spent. In a dispute where UCU and UUK are thrashing it out exploring how university expenditure is best managed and prioritised, we hear the voices of university management, of trade union officials, and even Sam Gymiah chipping-in from the sidelines. And yet, despite students being critical contributors of funding and benefactors of the system, their voices are barely engaged in the dispute.

All the evidence shows students want fantastic, well-motivated, and fairly-compensated academics and staff. They also want improved mental health services, careers resources, subsidised sports facilities, accommodation that is not inflated above local market rates, and refectory’s that charge a fair amount for a great quality meal. And, students feel this should all be possible because, unlike Scandinavia, we have investment from both the state and from the student.

Time for an ideological rethink

In theory, the post-18 funding review offers the chance to resolve these tensions, creating confidence in a fair and sustainable funding model for our university system. I suspect I’m not the only one who fears that the objective is not clarity in funding, a fairer funding system or even sustainability of funding at all. More likely, it’s trying to secure a reduction in state contribution. Or perhaps a modest slice off student tuition fees, to try to claw back some of the youth vote?

I don’t anticipate the review will be so radical as to return to state-funded education. But equally, I know that simple tweaks around the edges, to slightly reduce the burden on the state or individuals, will not fundamentally address the conflict between public and private investment in HE. Perhaps the funding review offers the chance for a comprehensive ideological rethink much more than a simple zero-sum game. Maybe taking a look at our Scandinavian neighbours for inspiration would allow us to start to understand who really pays and not just how much.

4 responses to “More notes from Scandinavia: who really pays?

  1. An interesting discussion, though one can’t help feeling that it is not one which the post-18 review will provide space for.

    Terms of reference dictate that the review will:
    “Maintain the principle that students should contribute to the cost of their studies while ensuring that payments are progressive and income contingent”
    and
    “will not make recommendations related to… taxation, and its recommendations must be consistent with the Government’s fiscal policies to reduce the deficit and have debt falling as a percentage of GDP.”
    So it’s hard to see what scope there is for reconsidering the balance between public and private costs of HE.

    That said, perhaps there is scope to consider what private funding means for the student-institution relationship as you suggest.

    One further thought – stating that the “UK funding model pushes significant debt burdens onto students” seems to me unhelpful. Surely, if we want to encourage as wide participation in HE as possible, we should be making the case that student debt is not a ‘burden’ at least in the way other kinds of debt are?

  2. Couple of points. Firstly, there’s no single group that you can term taxpayers; everyone who has to pays tax, even students. The views of taxpayers are indistinguishable from the views of the general population, because taxpayers are the general population; and there’s no clear sign of any consensus about the role and purpose of HE, based merely on the fact that people pay tax.

    Secondly, why shouldn’t HE be paid for out of taxation; not only is a good HE sector a benefit to a country’s economy, society and culture, but such an arrangement would effectively recognise what happens now. Upfront costs come out of taxation, and students pay back some (but very rarely all) of the incurred debt through taxation. Spreading the burden (in a tax system that is more progressive, and more closely focussed on wealth inequality rather than income inequality) would seem to be the fairest thing. After all, everyone benefits; so everyone- and especially those who can afford to do so- should pay.

  3. I sympathise with the tenor of the article but unfortunately the HE sector is not independent of other general questions of taxation and the redistribution of (social) income. We do not ‘enjoy’ a low taxation system as the article suggests – the damage that that long term policy has done across the public sector along with the privatising of it for both users (to be consumers) to the benefit of the providers has been the main instrument, along with the defeat of trade unions and the evisceration of local government democracy, in creating the inequalities that alarmed the Commission on Equal Opportunities to the extent that there was a mass resignation of their board.

    The inequalities outlined by Milburn and colleagues has an impact on educational opportunities, including access to HE, but more worryingly it is the HE sector that unwittingly reinforces the inequalities.

    Sorry but it appears that HE cannot act on this alone. it lost its autonomy to act sometime ago when it was the donnish dominion for the reproduction of an elite and also fully funded.

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