An Education

I was going to write a whole bunch, possibly multiple posts, about the proposed Higher Education reforms, ahead of tomorrows vote on increasing the cap on the ‘variable fees’ brought in in 2003 (aka ‘top-up fees’). I’ve been thinking a lot about the subject, but feel like there are a few particularly pertinent things so I’ll stick to them.

Private or public

What the coalition are proposing is a massive change in the philosophy of higher education, a part-privatisation – a change from publicly-funded but private institutions to being private bodies with government assistance for research and for teachingexpensive/strategically-important subjects.  They are not simply saying that graduates (who will pay the fees, not students) should pay more, but that it should be through their choice of courses and universities that directs the funding for teaching, rather than block grants from the state.  This does not mean a massive cut in funding for teaching, per se, but it is a market-led version that is not (contrary to some government statements) what the Labour government were going for in 2003.  Fundamentally, if one accepts that this student-led investment in teaching is a good thing then the proposals are fairly good – give or take flaws that will hopefully be ironed out, and of course the fees question. The measures to widen participation are a welcome addition (even if cutting Education Maintenance Allowances acts directly and oddly contrary to that ambition), as is the removal of up-front fees for some part-time students.


In terms of fees there are three big questions: Who benefits from higher education? Who should pay for it? And how should they pay?

Individual benefits:

It has been estimated that undergraduates cost (on average) £7000 per year to teach. Graduates currently pay £3,290 per year of their degree (they pay afterwards, hence graduates not students); it has been estimated that this year’s intake will leave with an average debt of £25,000 from the fees, loans and other costs of a three-year course.

There has been much talk of a ‘graduate premium’, said to average 23%, varying from 13% for history to 30% for physics and chemistry and more for medicine and law. These statistics (from a 2005 report – link) translate to a pre-tax premium of £89,630 for history, over £186,000 for physics and chemistry and £128,000 overall.  Since then, the average has apparently reached about £150,000; the Browne Report, the post-tax premium is given as £100,000 (or rather $158,074)

Nationwide benefits:

The higher education budget is £14bn per year; this is 0.85% of GDP, below the OECD average of 1.03% (2006 statistics).

Universities UK estimate that higher education contributed 2.3% to UK GDP in 2007/8, and that the sector generated £59bn of ‘output’.  The average return to the state on its investment in HE is said to be about 12.1% (compared to the graduate’s 23%).

So, who benefits?  Clearly, the greatest benefit is to students/graduates themselves, but there is a national benefit in terms of income and job-creation from the sector as a whole as well as from an educated workforce.

Who should pay?

There is a strong argument that funding from general taxation is fair, not only in getting rid of fees, but also because even the graduates with the lowest ‘graduate premium’ will pay more than the cost of their fees in income tax according to the life-income modelling. The post-tax premium for history (the lowest premium and the subject I studied) of £65,471, which suggests that £24,159 is paid in tax by these graduates that would not be paid those leaving school at 18 with A-levels. The statistics for physics and chemistry are around £55,000 and for all subjects (average) around £36,000. It seems incredibly unlikely that there is any widespread public support for free education though – it worked when 10-15% of young people went to uni, but not for 40-50%.  It is hard to know for sure, though, since pollsters don’t even bother asking.

The opposite end of the scale is for the full rate to be paid by the student, either up-front or (as, roughly, in the new proposals) by graduates.  Of these, the government plan is clearly better, since it does not charge students up-front.

An in-between idea would be to keep fees roughly where they are but make the payment system fairer.  Or to allow an increase in fees (to, say, £5000) but not to cut teaching funding, so that the extra money could be spend on improving education!  Imagine that! This would surely be a better plan, it would keep a balance of national-individual cost in proportion to benefits (around 70-30 to the graduate) and put more money into education.  If the £3300-5000 bracket were to be treated like the proposed £6000-9000 fee bracket, it might even be useful for widening participation.

Another alternative, although where it sits is unclear, is a graduate tax. Apparently Alan Johnson has this week been won round the the idea, which his leader Ediband has been keen on for ages.  It is now HM Opposition’s policy.  I say policy, what I actually mean is talking point. There is no policy there, just a phrase and a vague commitment to a 2% tax on income over a 20-year period. It is unclear what the target amount to recoup is going to be, would it reflect average fees of £3000, £5000, or more?

But wait a minute, a tax on income (presumably meaning over a certain amount) for a certain period to pay off fees, so that those who earn more pay more back… that sounds rather like the government’s proposal. Both are systems of graduate repayment that are in proportion to earnings and will stop below a certain rate (it is not a mortgage, your degree will not be at risk if you stop payment).  The fundamental difference is that in the government system there is a specified (albeit increased) end figure for repayment; with a graduate tax, that is not the case. Which is less discouraging, the knowledge that one will be repaying a large but specific debt or the knowledge that you will be paying an unknown amount, possibly subject to changes by later governments wanting more money? I have a feeling that the former is more off-putting, but there are not a world apart. Again, the debate would be easier if there was actually a policy against which to compare Willetts’ scheme.

Lack of proper debate

In all the anger over fee rises and teaching-funding cuts (often talked about as if they were unrelated rather than one making up for the other), there has been little real debate about alternatives – let alone about the fundamentals of why and whether we want so many graduates and the benefits to the state vs the benefits to the individual.  The complete lack of a plan from Labour does not help matters at all.

The worst part of the lack of debate is the speed with which the reforms are being pushed through.  In order to start the new scheme in 2012, the fee increase/variable-rate does have to be decided now (to allow decisions and prospectus-writing at universities) – Mr Willetts is right about that. But surely, surely, it is better to wait until the system can be debated as a whole, rather than pushing through the funding issue now – thereby making the remainder a foregone conclusion even before the White Paper is produced.  Willetts says that the wider reforms (and CSR-dicatated cuts in spending) will happen whichever way the vote goes tomorrow – this seems to have given him licence to tie the entire issue up without proper debate. Why not wait until 2013 for the reforms – produce a White Paper on the whole package in the Spring and debate it properly? Sadly, it is almost certain to go through.  Even if you think the change is a good idea, the speed and manner of the current debate and changes is worrying.

Anyway, those are my hastily-written thoughts on the matter. I wish that the Labour amendment to delay the fees vote until the White Paper had come out had passed, it it did not.  I hope that my MP (Bob Russell, Lib Dem) will vote against the fee increase tomorrow. I don’t think that fees should go up to £6000-9000 per year, although some other bits of the general policy are good (participation, etc).  What I do want is a proper debate on the subject and on the policy as a whole.  I fear I will be disappointed.


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