The effects of little-noticed threshold freezes
How much of an English undergraduate’s average tuition fee and maintenance loans does the government end up funding?
That is, to be clear, a question that can be answered in multiple ways depending on how you crunch the numbers and make the assumptions, but Universities UK (supported by London Economics) now reckon it is just 16p in every pound.
That’s a fair distance from the Treasury Committee’s recommendation that we should be aiming for nearer a 50:50 split, and from the original 48 per cent the taxpayer swallowed back in 2012-13.
UUK’s Vivienne Stern uses this shift to argue for “a reset, which recognises that we all benefit when a student studies for a degree,” noting that “the Treasury makes a profit on investing in graduates because of the higher tax and national insurance contributions they make, and society benefits from graduates staffing public services and driving economic growth.”
While overall spending has increased (from £18.5bn in 2012-13 to £20.9bn now, though a long way from the 2020-21 peak of £24.6bn) it has declined as an average amount per full-time student by 9 per cent since the start of plan 2 loans. The amount of money spent has not increased alongside the growth in student numbers – with much of this spending slowdown concentrated in the years since 2020-21, a period which encompassed the exogenic economic shocks of Covid-19 and Liz Truss and (perhaps more germanely) the freezing of the graduate loan repayment repayment threshold.
It’s the sheer opacity of the current funding system, and the amount of work that Maike Halterbeck and the team at LE have had to do to come up with convincing numbers, that shines through in this release. In living memory it was possible for the chancellor of the day to determine how much the government wanted to spend per student: and this decision was clearly communicated and documented to demonstrate precisely how much of a political decision it was.
The current approach makes the gradual loading of more and more of the cost of study onto young people (without, let us not forget, any benefit at all to the quality or sustainability of the education they were increasingly paying for) look more like the operations of some natural law. It wasn’t. It was a deliberate, considered, choice.