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The Labour Party is in the market for higher education funding ideas

Debbie McVitty speculates about what Labour strategists might be thinking about as they shop for a new HE funding policy
This article is more than 1 year old

Debbie is Editor of Wonkhe

Now it has emerged that Labour leader Keir Starmer plans on reversing Labour’s Corbyn-era pledge to abolish tuition fees for students attending university in England, the starting gun has been fired on a debate about exactly what a Labour higher education funding policy could or should look like.

There are strenuous efforts to cast this as Starmer’s “Nick Clegg moment”, with reference to the Lib Dem leader who infamously pledged not to increase tuition fees ahead of the 2010 general election and reneged on that pledge once in government.

There is a superficial parallel in that Starmer made a commitment to the free tuition policy during the Labour leadership campaign. But the electorate as a whole should on balance prefer that if Starmer is going to change policy direction, he should do that before a general election and give the public the opportunity to vote on the policies he intends to enact, rather than downplaying or avoiding the issue as, honestly, a lot of experienced commentators assumed Labour would.

So Labour is reportedly now in the market for HE funding policy ideas, and the window of opportunity is open to shape the direction of travel. And while higher education funding is hardly going to be the issue that drives the next election, Labour introducing it as a topic does put funding in play in a way that could force the other parties to reconsider their views on it as well.

The usual constraints

All countries that are seeking to grow access to higher education face a tension between a desire for unrestricted growth and management of costs. Any subsidised system that ties funding to the volume of students, and does not restrict student numbers, takes the overall cost of the system out of the control of the public finances.

Universities typically consider unrestricted recruitment to be a benefit of the current arrangements, and point to the opportunity to expand access and participation to under-represented groups. But as the system expands, the tendency is less for economies of scale and more for the per-unit costs to grow as well, as universities need to support a greater diversity of students with more complex needs, and find themselves taking on greater responsibility for things like student mental health. Moreover, unless the government is willing to increase funding on all fronts in line with demand, the available pot for student maintenance tends to get smaller as well.

Another concern is the likely appeal, or at least palatability of a new system to voters – and the decision which voters to target. A recent Savanta poll of 18-25 year olds for ITV found that a full 60 per cent said they would vote Labour if there was an election tomorrow. And while that poll might be taken to indicate that Labour need not actively court the youth vote, the comparable latest Savanta whole-population voting intention poll reported a more modest 39 per cent of 18-24 year olds who are likely to vote favouring Labour – compared to 50 per cent of 25-34s and 56 per cent of 35-44s – some of whom are presumably currently paying back their student loans. Recent HEPI polling of undergraduate students also found solid support for Labour (46 per cent), but no obvious consensus on what the higher education funding policy should be.

There’s also the vital question of whether these younger cohorts that favour Labour on balance will be motivated to turn out and vote on election day – traditionally the over-65s (who tend to favour the Tories) are more likely to make it to the ballot box. The problem with student finance is that it’s confusing because the headline ticket price doesn’t really relate to how much graduates end up repaying. So the worst case scenario for Labour is a big investment with barely any political payoff.

A third clear constraint on policy is the public finance accounting rules which now require that every kind of expenditure – both direct funding to universities and students, and the proportion of student loans that are expected to not be repaid (the RAB charge) – is represented as outlay on the public accounts.

As Jim has explained elsewhere on the site, this is presumably why the Conservative government changed the student loan repayment rules to radically increase the overall proportion of the loan that is paid by graduates over their lifetimes. If Labour were to reduce the repayment burden on graduates or increase the unit of resource/tuition fee without making repayment terms even more onerous, the result would be a net cost to the Treasury.

Starmer is keen – perhaps too keen? – to demonstrate fiscal prudence and avoid the appearance of uncosted policies that could make voters nervous about their future tax bills. But there is an opportunity here, too. The change to accounting rules weakens the case for the whole unit of resource being expressed as a tuition fee/graduate debt. And the downside of the current system from a government perspective is that what’s left of the teaching grant isn’t sufficient to use funding as a lever for policy change.

Labour may calculate that a reduction in the headline fee/total student debt and the reintroduction of an annual teaching grant structured around its wider policy ambitions – while likely to be more expensive for the public than the current system and unlikely to go down well with universities – has sufficient electoral and strategic upsides to be worth the risk.

Overall, while these constraints aren’t insuperable, they will be guiding Labour’s thinking, and the likelihood is that universities will need to be prepared for trade offs if the aim is to produce a policy that safeguards the future of the sector, plays well electorally, and avoids blowing the budget.

Mission driven

We don’t yet know where Starmer or his education team instinctively stand on the question of higher education funding but it’s always a good idea before jumping into the policy technicalities to think about the broader agenda a Labour government might espouse and think about where universities might fit in to that – funding is always a second order question, albeit a fairly important one.

Labour has set out five “missions for a better Britain” each seeking to address a long term, complex problem with “ambitious but attainable goals” and measurable outcomes, which government departments will be expected to work together to address. In his New Year speech in January Starmer promised to reform central government so that it is driven by these missions, and to shift power out of Westminster to give greater control of economic decision-making to communities.

The themes of these missions are:

  • Economic growth with benefits spread across the country
  • Clean energy
  • Reforming the NHS, reducing preventable illness, and reducing health inequalities
  • Public safety and crime reduction
  • Increasing opportunity and raising education standards

There’s a lot of detail yet to be released, but Labour’s hope seems to be that by convening actors across society around these five missions, the public will see meaningful change and impact. It’s all quite far from traditional retail politics, and is fuelled by a sort of soft managerialism that makes much of terms like “innovation”, “evaluation” and “accountability.” That is – in my view – quite a solid way to think about governing, but in its current form it seems unlikely to connect with the electorate. Most probably if Labour pursues this line of thinking the more digestible policies will fall out of the articulation of the missions, such as the recent proposed target around restoring confidence in the police.

Obviously, there’s no mission around university education or funding, but much in the same way as the Conservative government’s highly publicised but little implemented levelling up agenda offered an opportunity for universities to rearticulate their role in bolstering civil society, Labour’s five missions offer something similar.

In each case, there’s a question about what universities contribute to each mission at a national level and the potential implications for higher education policy – but perhaps even more importantly, how these missions might be flexed locally with universities as essential delivery partners, and convenors and facilitators of local activity.

At the macro level university research should fuel innovation, and support communities and government to evaluate – in fact a Starmer government should look to build close relationships with universities that can support Labour’s public policy objectives by offering independent, robust evaluation of policy. But there could also be opportunities on the student funding side as well.

Off the top of my head

On the education opportunity mission, the future of the planned Lifelong Loan Entitlement (LLE) has been questioned. But it’s probably at this stage more meaningful to ask whether Labour endorses the “tertiary” (ie consistent across all post-compulsory education), lifelong learning approach that the LLE seeks to achieve, whether it would deepen or attempt to bridge the problematic academic/technical divide, and whether a Labour government would look to follow Conservative policy in expanding opportunity more on the technical skills and apprenticeships side of things than in the traditional three-year undergraduate route.

If there were to be a degree of devolution applied to the whole of post-compulsory education, closer ties might be forged between locality and higher education funding mechanisms, with incentives structured to encourage graduates to be retained in economically underserved areas and businesses to recruit them. International students could be encouraged to come to the UK with graduate route visa extensions for those working in underserved areas or sectors.

Or a proportion of higher education places could be put under the influence of local actors giving communities some say in the extent to which or in which subject areas in which higher education places expand, or some places could be reserved for local students based on the availability of student housing in that area. And certainly, if local communities lack higher education provision, and want it in support of their growth, skills, and local wellbeing plans, a Labour government should undertake to find ways to ensure they get it.

The health mission could include a clear plan to address youth mental health, with a nationwide network of services with a consistent offering, giving universities the option to draw on local services for their students in return for expanding training for mental health professionals. Student finance arrangements could take account of the mental and physical health impacts of student poverty and the public value of students establishing healthy habits while at university.

Universities could be rewarded for their efforts to divest from fossil fuels, and pursue carbon neutrality, and students could benefit from widening opportunities for green internships and the development of skills that will be needed in the green economy. Students are highly likely to be victims of crime, especially the kinds of crime that tend to be less reported and less successfully prosecuted, including theft, cybercrime, and sexual violence – so building trust in policing means police forces that understand student issues and can work closely with universities to safeguard them.

This is all top of the head stuff, but in the months ahead as Labour deliberates on its position, it would be smart to think about funding debates in the context of the parties’ wider policy agendas and help politicians understand where universities need help, and where they can in turn be helpful.

The abstract value of university education remains widely understood, but as ever there’s not a reservoir of deep public support universities can rely on to help make their case against the needs of the NHS, schools, the justice system, the welfare system, and all of the UK’s other creaking public services that the next election will most likely be fought on.

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