Should Labour drop free education?

The news in the FT this week - that higher education funding is set to be Keir Starmer’s latest party leader election pledge to be broken - will annoy all sorts of people.

Jim is an Associate Editor at Wonkhe

In a story about Starmer’s “lack of vision” and “charisma as the leader”, apparently some of his colleagues fear his commitment to fiscal discipline will block the adoption of potentially popular big-ticket polices.

There are few policies that are more “big ticket” than free education, and the story says that Starmer’s desire to sound more fiscally responsible is likely to lead to Labour dropping one of its signature policies from the 2019 general election — the scrapping of tuition fees for undergraduate students — although the details are “not yet finalised”.

Labour’s manifesto from 2019 somehow managed to bring the cost of scrapping fees and bringing back grants at just £7.2bn a cohort. The problem is that that was based on 2017-18 student numbers and a freeze in the unit of resource – which allowed for an increase in participation, but by nowhere near enough.

So in today’s money things have got tougher – but there’s a bigger problem too. Because the party’s high command has been prevaricating over what to do on the issue and has had its eye off the ball on the detail, they’ve allowed the Conservatives to do four things that make what was already a tricky puzzle to solve nigh on impossible.

First, through the government’s fiddles with the repayment term and threshold, Labour has allowed the system that they will be trying to reform to become spectacularly cheaper from 2023 – with a RAB charge (denoting the subsidy from government) on loans of just 16 per cent and a total long-run government cost of £4.5bn a cohort. Whether Labour is trying to be fiscally neutral on HE spending or, at the other extreme, even if it was allowing itself to double that spend, it’s now very hard to do anything that voters will notice within that envelope.

Second, in doing those terms fiddles, the Conservatives have been able to to test, shape and normalise the idea that the government will spend less on each student than ever, all while using a mantra of fairness (it’s right that students pay back their loan, etc). The interest rate thing last week is an example of the trap set on this – if Labour can’t make the case for interest plus a fixed term now (which is what delivers progressivity in the system), it’s got little hope of being able to do so in the future.

Third, the smart money would be on figures in the party being told to go off and examine a graduate tax without all this “debt”. But progress on the Lifelong Loan Entitlement and modularisation of funding by the government makes that hard too – because either you sell to someone paying a “full” graduate tax before you pass a single module, or you somehow slowly rack up extra tax deductions from your each time you pass a module or a year, which will hardly incentivise staying on course.

And fourth, by being basically nowhere on student cost of living, Labour has allowed the Conservatives to significantly under price how much it costs both working class families (let’s call this the heart part) and crucially lower middle class families (let’s call this the Labour right head bit) to go to university. Any credible Labour solution on this will need to discuss cost of living – but a “fiscally responsible” version of dealing with maintenance will rightly now be quite expensive.

Add it all up and the big problem is that if you were trying to be fiscally responsible from here it’s hard to do anything to the parameters in the system that “looks good” and that are also actually helpful or progressive.

Are there alternatives? We know from the Milliband days that a few thousands off of headline fees won’t cut the mustard – and there are so many downsides to graduate tax that despite my instinctive loyalty to the idea, I’m now not sure it would fly.

What would I do? Well, for lots of good sound, ideological and practical reasons I’d like tuition fees to be free and that aspect of the market to be gone. We can have a different conversation about planning, place and number controls – but I do think Labour would be right to see off fees for tuition.

However. For some tactical, fiscal and pragmatic reasons, I could cope with a service fee to cover various aspects of the student experience – especially if the governance surrounding those services was more cooperative and cleaved off from the main university’s governance. I’m sorry, I just don’t think VCs make brilliant caterers, counselling managers or accommodation directors, and it all feels like universities are getting too big for their boots.

So if I was Starmer, I’d explore free tuition – separate and possibly regional or city structures for student services and facilities funded by a loan for the fee – and I’d look at generous maintenance loans with terms that created a low RAB charge, even if they weren’t especially progressive – generating a bit (but not a lot) of an incentive to stay local rather than go boarding.

That feels like roughly the right mix of principle, pragmatism, communitarianism, localism, choice, graduate contribution and debt reduction to me – as long as the numbers can be made to work.

4 responses to “Should Labour drop free education?

  1. “ Well, for lots of good sound, ideological and practical reasons I’d like tuition fees to be free”

    What exactly are these reasons? It’s a massive middle class subsidy? Any money spent on removing tuition fees would be better spent in early years. With some exceptions, the vast majority of people who get to University have been well served by the education system to that point. Lots of people are effectively never going to go to University before they’ve set foot in a primary school. Free Education in HE is a chant not a feasible policy…

    1. I would agree with this. Tuition fees are hardly putting off undergrads but not everyone can afford childcare. A much better spend of money (and vote winner) would be to extend free school meals to all primary-aged children in state education and guarantee a fully-funded nursery placement for every child between the ages of 6 months and starting school. This should apply to parents on benefits as well as those in work to encourage job uptake.

      Whilst we are there a full-on reform of secondary education should also be a priority. If the school-leaving age is to be kept at 18 then GCSE’s are largely pointless. Children would be taught the entire comprehensive curriculum before specialising at 16 rather than 14. This would ensure the survival of creative subjects but also give young people more confidence in making life choices. Who at 14 has any idea about anything? (And I say this with a 14-year-old son!)

  2. Depends on what we mean by ‘free’. Somebody has to pay. Objectivley, identifying those who benefit from HE and levying the cost from those is the most pragmatic. Who benefits? Well students, obviously but also business and also the whole population benefits from having a more educated population. So probably some sort of three-way cost split between those groups make the most logical sense. Not sure it’s a vote winner – but seems the most fair.

  3. There would need to be a lot of research done on it firts but replacing loans with a flat-rate graduate tax is the logical way to go. It would be an additional percentage of earnings but that percentage would be applied to any earnings made by a graduate with no minimum threshhold whether they did a paper round or became PM. The tax would also only stop once the graduate started drawing a state pension and be applied to all income, be it inheritance or otherwise.

    The actual percentage would be very small, perhaps 2-3%.

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