Progressive or political- how do you solve a problem like tuition fees?

Phillip Augar’s call for evidence for his panel’s Post-18 funding and fees review closed to submissions back in May. Other than at Wonkhe’s “Proceed With Caution” event, we’ve not heard much since- the Russell Group called for the restoration of maintenance grants (without explaining how to pay for them) back in August, and earlier in July Universities UK released some work on the financial concerns of students.

Trouble is, we already knew that students are “uncertain what universities spend tuition fee income on”, that “living costs are a more significant concern for current undergraduate students than the level of tuition fees” and that the current “loans” system is baffling. The question for policy makers is – explain it better, or change the system?

YouGov if you want to

The scale of the challenge was reinforced with some blink-if-you-missed it coverage of YouGov work on fees on the eve of A-level results day. “While satisfied with their degrees, most students do not think that £9,000 a year fees are justified”, said its headline – picked up only by ITV News. “This is despite the fact that the vast majority of graduates are satisfied with the quality of their course and expect to benefit from their university education”.

The dataset (for England and Wales) had actually already been (accidentally!) released back in June- albeit that time with Scotland included- and was helpfully tipped into Tableau by David Kernohan. At the time YouGov’s press focus was on snowflakes, so most missed the fees stuff – but the killer in the data was the question on policy choices. When asked what they would prefer- a cut in tuition fees, a cut in the interest rates charged on loans or an increase in the repayment threshold, the standout winner for students was a fees cut. For those that know the system inside out, this is daft – they’ll argue that all this would do is cut the unit of resource for everyone and benefit only the richest graduates. But it underlines the problem with the politics of fees.

Lording it

Earlier this summer I had the dubious pleasure of seeing David Willetts and Andrew Adonis going head to head on university finance. There they were, two Lords of the realm busy rewriting history and outsmugging each other on their respective perspectives on making students pay for HE. The basic argument goes like this. Willetts argues that the myriad of technical features of the post-Browne 2010 confection are inherently progressive, impossible to unpick and have helped insulate the sector from an austerity hungry treasury. Adonis, on the other hand, argues that institutions have become wasteful and bloated as a result – and the politics of a “trebling of tuition fees” displayed a tin ear for the political mood both of the time and the emerging twenty-something political class.

Willetts’ “A University Education” largely describes the 2010 settlement rather than telling the story of how it was arrived at and negotiated. But we sometimes forget that he was in coalition- and so we don’t know what other options (other than pure Browne) were considered to get there. We know, of course, about the Lib Dems’ history, the NUS Pledge and the 2010-summer of balloon floating of a purer Graduate Tax. But surely as they sifted the options they must have worried that the system’s technical progressiveness was also politically miserable? Or could it be that Willetts was a political genius, carefully nudging his secretary of state towards the system he wanted knowing he would take the technical credit whilst Cable took the political blame?

Optimism and Pessimism

The problem is that the basic features haven’t taken hold in the way that Willetts might have wanted, and with the Lib Dems long gone it’s now the Government that gets the blame. No wonder. If the main progressive feature is that only 17% of graduates will now pay back in full, you’ll forgive graduates for either optimistically believing that they won’t need the help or being pessimistically worried that they’ll one day have to be so unsuccessful as to have to be part of the subsidy. Meanwhile the headline fee that hardly any of them will pay looks high, and a loan statement clocking up interest on it is sent out throughout an ever extending and emerging adulthood, generating an educated middle class of uncertain twentysomethings casting round for blame about their precarious jobs and lack of housing. Even shifting the repayment threshold looks like putting off the doom.

It’s one thing to argue that taking the middle classes out of the welfare state undermines it- it’s quite another to end up with a system that doesn’t feel like it benefits the poorest either. Willetts argues for regular and planned tweaks, but Adonis’ apocalyptic arguments about the whole system crashing down sound more realistic. Money Saving Expert Martin Lewis argues for better information and better explanation, but changing the language won’t work – there are legal and accounting reasons (at least, for the moment) why the mix of fees, debt, interest, thresholds and cut offs look set in stone. Those people that say we should abolish a headline fee and debt and just charge graduates a salary percentage for a while will need to explain to Stormzy why his scholarship wouldn’t be allowed to pay for a couple of students’ fees up front. And these more fundamental changes- a graduate contribution that could break the hypothecation link between individual contribution and institution- will be fiercely resisted by the sector.

Chevy to the levy

As such it’s easy to forget “the levy”. Back in 2010 Lord Browne’s original proposals involved keeping back a proportion of additional fee income to help pay for the costs of lending, and was to “deter institutions from transferring costs to the Government by charging fees that do not match the employment returns from their courses”. It’s not at all clear in hindsight that it really would have achieved this, but there’s no doubt that providers would have been wary about setting their fees at £12,000 if they would only get £8,760 as a result. That Willetts and Cable settled on a fixed £9k is what people remember, but in Browne’s confection providers were only going to get £7,650 of it.

Arguably the treasury’s revenge for the totally unexpected behaviour of everyone pitching at £9k, and for the ditching of the redistributable levy, was largely to remove other subsidies – everything from access funding to capital expenditure was now to be delivered by the individual provider, though that’s an approach that generates its own inequalities. Institutions doing the heavy lifting on widening participation have students that are more expensive to teach and support, but if redistribution is only possible within a provider they’ll feel they’re getting a bad deal. Meanwhile individual students in the elite bit of the sector who perceive that they are getting less than their £9k’s worth at the altar of institutional cross subsidy rightly complain about value for money, because the individualised framing of the fee is at odds with the need to cross-subsidise science, research, buildings and WP.

Alternatives and change

If the only discussed alternatives are free tuition (which critics argue is expensive, results in large parts of the experience not really being free through services fees, or a choking off of massification altogether) or a graduate tax (which loads of people like but no-one can make work), we’re in trouble. And it’s not clear that there are practical alternatives on Auger or anyone else’s table. But we do need change.

A system that flaunts the public subsidy now – both for everyone in general and the people that really need it – is surely the first prerequisite for reform. The second is presentational:  vowing never to say that graduates “owe” substantially more than we think they’ll ever pay. The third is tackling the costs that make residential participation so expensive- the student funding crisis (and the pain felt by twentysomethings) is fundamentally a housing crisis that won’t be fixed by the reintroduction of some paltry grants. And the fourth could be weaning ourselves off the notion that competing providers can- all on their own- redistribute in the various interests we collectively express through the ballot box. Strangely, in the balancing act between progressive and politically palatable, we might end up robbing Willetts to pay Adonis.

One response to “Progressive or political- how do you solve a problem like tuition fees?

  1. It’s a shame the discussion doesn’t get into the numbers because without it there’s no prospect of a plausible answer. As a previous piece on this site calculated, we’re talking about something like £9bn for each annual cohort of students if the taxpayer were to start paying their current tuition fees plus reintroduced maintenance grants. With usually three years of students in the system at any one time, that’s an annual bill of around £27bn. And that’s where the difficulties start because it’s such an enormous sum. We could substantially reduce it, of course, by cutting student numbers dramatically or by slashing the funding level per student which in turn would mean universities sacking a lot of lecturers and/or paying them a lot less and probably quite a few institutions shutting down entirely. But I note that few if any proponents of “free university education” would favour those expedients for making the bill more affordable. So instead we’d need to find all that new money. The Treasury ready reckoner tells us that only basic-rate income tax and corporation tax could be increased sufficiently to raise an amount of that magnitude: the figures are around an extra 7% on the average earner’s income tax or around an additional 10% on corporation tax (this is an under-estimate because it takes no account of the mitigation effects as people and businesses seek to avoid the full impact of such massive tax rises). Alternatively we could take £27bn from an existing department: just to give some realistic perspective, that’s about three-quarters of everything the UK spends on defence or what we pay for police, the courts, security and prisons. No-one, however, wants to confess to wanting to push through such drastic tax hikes or favouring effective abolition of another major part of the national budget to fund their dream of “free education”. I wonder why that might be?

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