It’s 2029. The international student fee levy is finally in place, after a complicated legislative passage, further consultation, and squabbles over implementation.
Still riding high in the polls, though with an eye to accusations of unfunded spending commitments, Reform’s manifesto promises to jack up the levy to 40 per cent, explicitly labelling it a lever to cut net migration and unsurprisingly deaf to its effects on university balance sheets (as well as to arguments that this could in fact reduce the overall take – they have modelling which says it won’t).
After all, the primary legislation to operationalise the government top-slice of universities’ student income leaves the exact amount of the levy to the discretion of the Secretary of State. It will be a relatively simple laying of regulations to have the new percentage in place by autumn.
Scratch that – it’s 2032. The Conservatives are back in power (somehow). The industrial strategy has been binned, and with it the underpinnings of the “priority subject areas” that have determined which students and which courses are eligible for maintenance grants. With the pretext that those who benefit from higher education should in later life foot the bill – and the entirely accurate observation that whether maintenance is in the form of of grant or loan doesn’t actually affect whether students are “working every hour God sends” to support themselves while studying – the Conservative government decides to end the confusing patchwork of targeted grants it has inherited and (once again) shift student support over to maintenance loans. (Oh and the levy income will instead be used to plug the growing apprenticeship overspend.)
Now when the act passed there was nothing that made a cast-iron link between grants and the fee levy – indeed, there’s not a single mention of how the funds should be spent on the face of the bill, because that’s not the kind of thing you can practically legislate for. Backbenchers flagged this, ministers said it was a commitment and they would stick to it, and Labour’s majority held up.
This hypothetical Tory Treasury is still antsy about expanding the loan book – gilts are still high, the era of rock-bottom interest rates seems a distant memory – and the price of raising borrowing for maintenance is the announcement of a multi-year freeze on tuition fees. Here we go again.
How about this one: it’s halfway through Labour’s second term in office, and it’s becoming clear that the modular LLE hasn’t really taken off. The demand for several thousand pounds of plan 5 loan debt in return for a short course has, shockingly, not materialised. As happened with the pilot exercise, DfE tries to tempt learners in with student support grants, rather than chunked up maintenance loans. When this doesn’t bear much fruit, as with the modular acceleration programme the next play is to entirely waive tuition fees for technical courses, just deducting them from LLE entitlement instead.
Despite low demand, the need to keep finding little pots of cash to spend for the incentivising of modular provision has stretched DfE’s willingness to let too much of the levy income go towards maintenance grants for full degrees (especially as, to the surprise of few, the department was never intending to allocate the whole haul to maintenance grants).
Maybe there’s a damning National Audit Office report. Maybe there are anecdotal reports of spotty financial controls and agents encouraging students onto certain newly launched courses to get access to lump sums of maintenance, rather than for genuine study. With an eye on the next election and the 10-year NHS workforce plan’s final year looming, the thought pops up – wouldn’t it be politically expedient to just bring back grants for nursing students rather than fiddling around with all these industrial strategy bits and pieces?
Final one. It’s 2038 or something, and the Office for National Statistics is finally approaching the end of its review of the classification of higher education in the national accounts which it began in 2017. To be fair to the beleaguered stats body, each UK nation has either made large changes to its higher education system in the interim, or announced wholesale reviews which have then not led to much change, leading to one pause after another. Finally though, the ONS is in a position to weigh up all the dimensions of the government’s oversight and control of the English higher education sector, which now includes the ability to skim off a set percentage of all international student income – and decides on classification within the public sector.
All the sector submissions and parliamentary interventions which tried to advocate against the levy on these very grounds – the scare stories of controls on borrowing, limits on senior staff pay, and changes to how accounts are managed – are vindicated. (However, as Julian Gravatt has pointed out in the definitive article on the topic, the government of the day then carefully takes steps to address just enough of the specifics of the ONS’ decision and thus move universities back out of the public sector. It doesn’t want to lose out on the income the levy brings, so instead it makes changes elsewhere, to regulation perhaps, or pensions. It’s all a bit of a mess.)
Through the trapdoor
However the government decides to legislate for the fee levy – it might be a standalone bill, or wrapped up in a larger HE Act – it’s going to be a complicated process. Labour backbenchers have been expressing concerns since it was first mooted, but the grafting on of maintenance grants means that it will be harder for MPs to vote against.
The sector has largely marshalled two arguments against it: that it will enormously destabilise finances, and that it’s unfair and risky to further cross-subsidise home students with international income. On the first, it’s clear that the government is not convinced that there isn’t a bit more to be squeezed, especially as it has seen much of the sector impose year after year of inflation-busting increases to overseas fee sticker prices – it’s probably no surprise that the white paper modelling saw the cost of the levy passed on, even though some universities will be unable to achieve this in practice. It’s still a sensible argument to make, though until we see to what extent the government is slow-rolling a wider package of tuition fee increases it’s hard to know whether it can gain traction.
Equally, the argument about cross-subsidy is proving and will continue to prove ineffective, given that DfE has hinted its intention to claim that this helps higher education make the case for international student recruitment to the wider public on exactly those grounds.
But there’s a larger, longer-term case to be made to ministers and parliamentarians, that considers the enormous unintended consequences and political risks that prising open HE balance sheets in this way will enable. Once the backdoor has been installed, it’s there for hostile actors to take advantage of, and for user error to compound the problems. It is verging on a certainty that the legislation will neither restrict the level the levy is set at nor ringfence how its takings are used.
Now the announcement has been made it’s almost certainly too late, but the need for the government to legislate to make this a reality points to missed opportunities around cooperation on access – a sector-owned and co-funded pot of money for student support and, yes, redistribution would have been far more effective at staying out of the political fray. This levy will be square in the middle of it, for many years to come.
