The Independent View: Why the Lib Dems should end their opposition to tuition fees

The Liberal Democrats stand alone among the three main political parties in promising to abolish university tuition fees. They do so in the hope that making tuition ‘free’ will draw more students from low income families into the higher education (HE) system.

This superficially attractive proposition ignores two important facts, however.

First, there is no such thing as free tuition – someone, somewhere has to pay, and under the Liberal Democrat plan that ‘someone’ is the taxpayer. And since most taxpayers are non-graduates with relatively low lifetime earnings, the policy involves a significant redistribution of resources from poor to rich.

Second, the abolition of fees will do almost nothing to get more poor students into university as the Liberal Democrats claim. Why? Because the gap between the HE participation rates of rich and poor students was not created by the introduction of tuition fees. Indeed research suggests that the gap actually narrowed slightly in the years after fees were introduced in 1998.

The real reason why students from low income families are not going to university in greater numbers is because too few are achieving the exam results they need to apply. This fact is borne out by a recent study showing that, although the poorest 20% of students are six times less likely to go to university than the richest 20%, there is almost no difference between the participation rates of poor and rich students with the same A-level results.

The Liberal Democrat policy on fees is therefore both regressive and ineffective. It is also becoming increasingly expensive. As student numbers and average fee levels have grown, so has the cost of the Liberal Democrat policy: abolishing fees would have cost £280 million at the time of 2001 election and £1.5 billion at the 2005 election. In 2010, it will cost £2 billion. If the £3,000 fee cap is lifted, that figure will go up again.

The current economic downturn should help to focus minds on whether or not this represents an intelligent use of scarce resources. With a lengthy period of fiscal contraction (and £37 billion of spending cuts) waiting on the other side of the recession, the party needs to decide whether it really wants to spend an additional £2 billion subsidising relatively well-off university graduates. After all, every pound it spends reducing graduate debt is a pound that cannot be spent enhancing services, or reducing the tax burden, for families further down the income scale.

If the party is serious about widening participation in higher education, it should concentrate its efforts on driving up pupil attainment levels, not bringing down graduate debt levels. It could do this by taking the £2 billion it would cost to scrap fees, and using it to increase the ‘Pupil Premium’ – an innovative new system of deprivation funding designed specifically to improve educational outcomes for disadvantaged school children.

* Julian Astle is Director of CentreForum, the liberal think tank. His latest paper, ‘Time’s up: why the Lib Dems should end their opposition to tuition fees’ is available here.  And coming up later today, Paul Holmes MP responds to arguments.

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84 Comments

  • Grammar Police 2nd Dec '08 - 11:29am

    “the party needs to decide whether it really wants to spend an additional £2 billion subsidising relatively well-off university graduates”

    Except that one of the reasons to oppose tuition fees is because fear of debt and the worry that “I can’t afford to go to uni” should never be part of the decision on whether you get a degree or what it’s in (I believe). Part of it is about perception – there’s a level of ignorance about who tuition fees and top up fees affect, and alternative sources of funding.

    We oppose these not to subsidise “well-off graduates” but to make sure that as many people as possible can choose to go or not without worrying about money.

    Similarly, not all graduates end up “relatively well-off”. I’d happily see an end to up-front fees, paid for by a graduate tax or income contingent loans.

  • Left College without debt in 1991 2nd Dec '08 - 11:32am

    Looks like debate at conference will be interesting.

    I would like to see votes on the following options coming wither from the paper or amendments.

    1. As Astle above. End opposition to tuition fees and direct money instead to schools – or perhaps Kramer’s childcare proposals.

    2. Means tested payment of tuition fees so that rich students whose parents have paid for their education since year dot don’t suddenly get a freeby off the state when they hit 18.

    3. State pays all tuition fees, including for part-time students with the high costs that entails.

    I would probably go for means tested state support for tuition fees, at least that way the policy is flexible and can deal with any raising of the cap, while maintaining the principle of free tuition for those who need it.

    What say you?

  • RE Grammar Police above:

    “I’d happily see an end to up-front fees, paid for by a graduate tax or income contingent loans.”

    Up-front fees no longer exist, Labour abolished them. Now tuition fees form part of the accumulated stuudent debt.

  • Grammar Police 2nd Dec '08 - 12:10pm

    Ex Priest: my understanding is that tuition fees are still required to be paid to the uni up-front/during your course – it’s merely that you can get a non-means tested loan to cover them.

  • Without full grants, my parents wouldn’t have gone to university. As a result, I doubt that I would have either. There is a benefit to society in having graduates – teachers, doctors, lawyers (yes, even them) and for that reason the State needs to pick up the tab.

    But the cost will rise – and I believe we need to look again at the numbers going through university with a view to reducing them. Everyone should have equal opportunity to go to University – but selection should be done on an academic basis, and nothing else. Continuing growth in numbers of univeristy graduates will only diminish the value of a degree – in the US, following the expansion of university education, by the early 1990s an undergraduate degree held the same worth as a high school diploma from the 1950s. We need to make sure this doesn’t happen here.

  • You make accurate observations about the reasons why low income families are less likely to attend HE but I do not agree with your interpretation as to why the lib dems wish to abolish tuition fees.

    I do not believe it is just to allow equal access to HE for lower income groups but because education is a right for individuals and a necessity for a sustainable workforce. This is why the lib dems will give access to all individuals, whether it be HE or learning a vocational skill.
    It is one of our policies which I am most proud of.

  • Matthew Huntbach 2nd Dec '08 - 12:14pm

    Published on the same day that the Education Guardian runs a story of a student who is having difficulties looking after himself, whose performance is dropping, and who is thinking of dropping out altogether because he cannot afford the cost of university.

    By the way – why are universities asking for more fees? Because they want to use the money to subsidise research. The government has set up a funding scheme for universities which means there’s a perverse incentive to put as little effort into teaching as possible and as much into research, because research brings in extra income and pushes you up the league tables, so you’ll get the good students anyway.

  • I’m opposed to tuition fees on principal. We don’t charge for further eduaction or schooling. Education should be free of fees all across the board.

  • Dominic Mathon 2nd Dec '08 - 12:35pm

    Non sequitur alert:
    “And since most taxpayers are non-graduates with relatively low lifetime earnings, the policy involves a significant redistribution of resources from poor to rich”

    This is nonsense many times over.

    The *number* of taxpayers is not the same as the amount of tax they pay. Funding through the general taxation system also means funding through higher rate taxation and indeed our proposals for tax on wealth (eg changes to capital gains and non-dom taxation).

    Further, the policy is designed to fund access *to all* with sufficient potential to benefit from higher education. So it is redistribution from the state as a whole in favour of those who are best placed to benefit from it, making no judgement whatsoever as to whether they are from poor or wealthy backgrounds, nor whether they will go on to be in highly paid jobs or contribute to society in other ways.

    And what about those people who do benefit from higher education in such a way that it assists them to achieve higher paid jobs? Well, hey presto, we have a taxation system which means that they will end up paying more tax as a result – it’s called income tax.

    If our economy is to be anything in future, it is to be one of high skills. Higher education is an investment by today’s government that will reap handsome rewards for tomorrow’s government – and only our party is far-sighted enough to see it.

    Let’s not bow to this duff thinking – make sure you’re a voting rep, go to conference and vote to support the existing policy!

  • Dominic Mathon 2nd Dec '08 - 12:37pm

    lloyd – good point, and we shouldn’t neglect vocational training which again, is an important investment, but it isn’t an either/or.

  • Daniel Bowen 2nd Dec '08 - 12:50pm

    I generally agree with Dominic Mathon, but the myth Astle paints about the reasons people from low incomes don’t tend to go to university, needs to be exploded.

    Poor educational attainment is only part of the problem. A fundamental reason is lack of aspiration.

    Part of this is a feeling that higher education ‘isn’t for me’. Part of it is a natural cultural unwillingness to commit to staggering levels of debt. Although the reality is that those on lower incomes are shielded from some of these costs, the barrier is still huge. Another reason why fees are part of the problem.

    Julian Astle clearly hasn’t talked to very many people on lower incomes.

  • lloyd: ‘I’m opposed to tuition fees on principal. We don’t charge for further eduaction or schooling. Education should be free of fees all across the board.’

    But higher education is not available to everyone, it is a privilege. Why should those who do not go to university subsidise the privilege of those who do? Surely this should be a classic Tory policy – make the working class pay for the middle class’ education?

  • Hywel Morgan 2nd Dec '08 - 1:13pm

    I agree Dominic. You would expect something with considerably more intellectual rigour from the Director of “our” think tank.

    I was going to say that on this basis we should scrap our policy of free care for the elderly. But a bit of googling suggests we already have and I didn’t notice.

  • It is not incoherent rubbish. The scrapping of tution fees would be middle class welfare.

  • David Allen 2nd Dec '08 - 1:27pm

    Astle says “the gap between the HE participation rates of rich and poor students … actually narrowed slightly in the years after fees were introduced in 1998.” Why pick on that date? Top-up fees began in 2004, and that was the real whammy. Might it be that the statistics dating from 2004 don’t support Mr Astle’s case quite so conveniently?

  • Hare's Running 2nd Dec '08 - 2:19pm

    The proposals from CentreForum will not be the proposals from the FPC.

    So before everyone gets their knickers in a twist let’s see what proposals come from the FPC.

    I believe they are meeting in 2nd week of January to finalise the HE/FE policy paper.

  • julian astle 2nd Dec '08 - 2:22pm

    A point of clarification.

    Some of the comments here suggest that, while the Lib Dem fees policy clearly targets subsidy at the rich (two thirds of the £2 billion it would cost to abolish fees in 2010 would go to the richest 40 per cent of families), the policy isn’t regressive because rich people pay more income tax than poor people.

    This argument would only hold water if all government revenues came from income tax. But they don’t. Just over half of all revenues come from other forms of taxation, and as Vince Cable reminds us, this means that the tax system as a whole is not progressive. The result is that the poor pay a higher proportion of their income in taxation than the rich.

    For this reason, the only way to make the policy ‘fair’ is to ask those who benefit financially from going to university to pay a (small) proportion of the cost.

    This leads you either to a system of fees and loans, or to a hypocthecated graduate tax – the main difference being that under a fee/loan system, payments are ‘switched off’ once the debt has been repaid (or the repayment period ends), while under a graduate tax, payments go on indefinately, with the result that many people end up paying for their university tuition several times over.

  • Matthew Huntbach 2nd Dec '08 - 2:23pm

    Hywel

    “Our” thinktank?

    Did we ever get a vote in that? Or did it just set itself up (funded by …?) and say it was? Well, well, isn’t it funny how those on the right of our party seem to have so much more access to money to set up these sort of things and claim to be “us” than those on the left?

    Happy to take your contribution, Julian Astle, but tell us, WHO pays your salary to be Director of CentreForum? I work in my day job for my salary, and any writing and thinking for liberalism I do for free.

  • “If our economy is to be anything in future, it is to be one of high skills. Higher education is an investment by today’s government that will reap handsome rewards for tomorrow’s government – and only our party is far-sighted enough to see it.”

    Dominic, I would certainly agree with you on this point – but I wouldn’t agree that our present policy is necessarily the best way to achieve this. This is because of the way in which the market for higher education currently works. It’s structured around places & subjects, rather than the employment outcome of any particular degree.

    Humanities degrees cost the same to take as science degrees. Generally, at the application stage there is little incentive to chose a degree using criteria beyond what the applicant enjoys, or is good at. Employability is a factor that will only affect applicants when they’re 20% older. It is, therefore, not as strong an incentive as it should be if our goal of a high-skilled economy is to come to fruition.

    For example, I was repeatedly warned that doing Philosophy at degree level wouldn’t give me any employable skills. Nevertheless, I chose it, because I loved the subject. I paid tuition fees to do it. Under our proposals, the taxpayer would’ve subsidised me doing a degree I loved for an outcome that wouldn’t necessarily benefit the economy (well, it hasn’t yet, I work in politics…). This doesn’t appear to be fair, or to be in accordance with our strategic goals.

    If we do retain our current policy, I would hope that it’s merely part of a sophisticated approach to higher education that attempts to identify what skill sets will be valuable in the future and provides short-term incentives for market participants to choose degrees that are economically viable. Charging tuition fees for ‘fun’ degrees would appear to be an easy way to achieve this. Knowledge itself is a good, but it’s not necessary for everyone in our society to be subsidised to acquire it.

  • Damn, Laurence posted exactly what I said, except much more succinctly.

  • “In any group, course, business, tribe, country, species there will always be some wasters who will be carried by the others. However much we are forced into being good little ants some of us will want to do a little thinking.”
    I’m slightly puzzled by this, Wit. Are you saying wasters are thinkers? Because, in my experience, it’s usually the opposite.

    And I fear you’ve rather set up a straw man, there. No-one is saying that the study sociology should be banned, merely that it’s not necessary that as many people are subsidised to take it to degree level as is currently the case with our policy. I’m of the opinion that, further to my comments above, someone should indeed be subsidised to study sociology – as long as they’ve already demonstrated that they’re good at it.

  • That should be ‘some people’ rather than ‘someone’, even though the idea of a Royal Sociologist to the Queen is quite amusing.

  • Dominic Mathon 2nd Dec '08 - 3:07pm

    Wit & wisdom lives up to his name – much of HE is about learning how to think rather than learning specific pieces of applicable knowledge. I can’t think of any time that knowledge of 17th century history has helped my work as a chartered accountant and tax adviser, but it was a key part of my learning process.

    Some like Adam may do socially useful jobs with their degrees, and that’s great for society. Others like me may end up in high-end wealth-creating jobs and by suitably taxed on it (though rightly under our policies would pay still more tax too). But either way, society is better off.

    Julian Astle’s clarification really is nothing of the sort. Once again, it starts with a false premise, namely “Lib Dem fees policy clearly targets subsidy at the rich (two thirds of the £2 billion it would cost to abolish fees in 2010 would go to the richest 40 per cent of families)”.

    Firstly, this ignores the deterrant effect of fees as explained in various comments above, which is most marked on those who are least well off. Secondly, “richest 40%” is actually hitting a lot on middle incomes (and it is all about incomes here rather than wealth). And thirdly, he is once again conflating the financial circumstances of the student with that of their family.

    As James so lucidly explains above, there are indeed inequalities in the taxation system – something which our tax policies seek to address – and that is where such policy focus should lie. In particulr we only start to address some of the issues of generational imbalance in the tax system – and Julian’s proposal would if anything exacerbate this.

    This isn’t redistribution to the middle class, it’s redistribution away from the young and to the old. To the likes of Julian and me who’ve already benefited from free enducation (perhaps Julian’s older than me and got a grant too).

    This isn’t a left/right thing within the party (to the extent such labels even make sense) – opposition to change in our policy (or whatever variant is ultimately proposed) seems to be equally vociferous from all quarters including “straight down the middle loyalists” like myself. And one or two of us look forward to the campaign when it comes to Conference …

    I also don’t think there’s any merit in challenging the sources of funding for Centre Forum – it’s fine for them to come up with ideas so long as people are clear these aren’t party policy. As I understand it the think tank is funded partly by a handful of large donors and partly by some smaller regular donations by individuals of whom I am one. Sorry, let me rephrase, *was* one. There seems little point funding something when you disagree with so much of their output.

  • “But that basically means that people who are lucky enough to be intelligent can basically spend three years pissing around at other peoples’ expense. That seems somewhat unfair on those who happen not to be intelligent.”

    It’s entirely possible to be mediocre with a humanities subject by putting in the minimum amount of effort, but it’s very hard to be very good without working your behind off. We’re talking about investing taxpayers’ money into education, and I think it’s only right that when we do so we extract the maximum amount for our investment. And so, money should go to the intelligent & diligent, rather than the unintelligent and workshy.

    Put simply, equality of opportunity yes, equality of outcome no.

  • Dom, I do thank you for calling my job ‘socially useful’ – with my work hat on, I am entirely against the proposal because of the votes it will cost us. But my point still stands. While it’s true that degrees do help one learn how to learn, as it were, this skill is one that’s universal to all degrees. While I would almost certainly be a lot more dull if I’d done Chemistry, I’d also have many more economically useful skills.

    And this is relevant, because at present the number of socially useful jobs open to my and my philosophical ilk is very limited. There’s a far greater supply than there is demand. As I said above, this would indicate that there’s something wrong with the higher education market. Time for state intervention, I say.

  • Richard Huzzey 2nd Dec '08 - 3:48pm

    James said:
    “More widely, it has helped me intellectually”

    This is the key point, as Dominic and others have underlined above.

    Education is not simply about teaching you “useful knowledge” (like how to convert metres to feet) or “useful tricks” (like how to calculate the cost of multipacks in a supermarket). You can learn to think analytically and critically, in ways which provide transferable skills to most outside jobs, in a number of different disciplines. Including sociology.

    I dare say your robust written debating style on this website wouldn’t be what it is was without a university education, even if (by the sound of it) you didn’t enjoy it.

    I don’t know any university that thinks its main purpose is to impart mere facts. It is there to impart and cultivate knowledge.

    It’s good to see so many wise responses to this pamphlet. I’d echo Dominic’s comments about members ensuring they are conference delegates so they can vote on whatever version of these ideas is proposed by FPC.

  • I would like to challenge the assumption that Higher Education equates to higher quality education.

    “widening participation in higher education” may or may not be desireable depending on the content of what is offered.

    If HE is just a way of keeping three/four years of schoolleavers off the unemployment register then it is a waste.
    If HE fails to add value by providing additional usable skills then it is a waste.
    If HE fails to raise standards across the board it is a waste.
    If HE diverts resources away from other educational areas then it is a waste.

    I would also like to point out my strong opposition to the government monopoly of HE as the reason why most HE institutions are unable to build up significant endowments or offer sufficient bursaries/scholarships.

    This government monopoly has also showed itself incapable of sufficiently regulating examination boards.

    And that’s not even mentioning the dubious and dangerous nature of debt-financed activity – which the current economic crisis should be warning us against.

  • Matthew Huntbach 2nd Dec '08 - 4:08pm

    Dominic

    “I also don’t think there’s any merit in challenging the sources of funding for Centre Forum – it’s fine for them to come up with ideas so long as people are clear these aren’t party policy”.

    No, there’s every merit if it turns out there’s big money pushing one option, but no money to push alternatives. Fancy glossy leaflets, full time directors on the one side, a few people trying to do what they can in what little spare time they have on the other? I’d love to be able to do policy thinking and writing and get paid for it, but since I don’t like the power of big money, who’d pay me to do it? Not the same people as pay Julian Astle, for sure.

    And “clear these aren’t party policy”? Well, it slips sometimes doesn’t it? If this bunch of self-appointed thinkers and their shadowy paymasters put themselves across as “the” liberal think-tank, it’s hardly suprising that many suppose it has some sort of official status, and write of what it produces in those terms.

  • julian astle 2nd Dec '08 - 4:09pm

    James,

    I AM concerned that the Lib Dems are proposing a deeply regressive policy, the benefits of which flow largely to individuals at the top of the income scale. And I do think it is reasonable to ask those who go to university to pay something towards the cost of their tuition. But this isn’t actually my main argument.

    My main argument is that the policy won’t deliver its intended outcome: namely, helping bright students from low income families to get in to university if they wish to do so.

    If we are to meet this objective, we need to be clear about what is keeping bright but poor students out of the university system at present. There are essentially three such factors:

    First, the cultural differences between rich and poor students (the degree to which an individual aspires to a university education depends to some extent on the expectations and aspirations of his or her family, friends and neighbours).

    Second, the differences in their ability or willingness to pay for a university education (perceptions of affordability and attitudes towards debt are heavily influenced by parental income, with poorer students tending to be less willing to borrow, or to forego three years’ earnings, in order to study).

    And third, the differences in prior educational attainment of the two groups (poor school children are significantly less likely to get the exam results needed to get into university).

    The current Lib Dem policy is based on an assumption that the second of these factors (cost) is the key one. Why else would you spend £2 billion reducing the cost of studying?

    But the evidence suggests that this assumption is deeply flawed.

    The Institute for Fiscal Studies recently conducted a study that controlled for prior attainment (by looking at the HE participation rates of rich and poor students with the same ‘A’ Level results) and found that “the socio-economic gap that remains on entry into HE, after allowing for prior attainment, is very small indeed: just 1 percentage point for males and 2.1 percentage points for females”. In other words, if you take 100 school leavers, all of whom have the same ‘A’ Level results, and then divide them into five income groups, from rich to poor, you might find that among the richest 20 per cent, 91 per cent go on to university, while among the poorest 20 per cent, only 90 per cent do so.

    So the problem the Lib Dems are throwing £2 billion at is this 1 per cent gap between rich and poor students with the same results.

    But the real gap is, of course, much larger than this. The richest 20 per cent of school children are SIX times more likely to go to university than the poorest. The reason? They are far more likely to get good exam results while at school.

    If we want to adress the problem of unequal access, then, we have to address the problem of unequal attainment at school.

    That is what my proposed policy (almost doubling the size of the Pupil Premium) aims to do.

  • John Champkin 2nd Dec '08 - 4:17pm

    This debate has got very confusing

    This is partly due to the stupidity of most of the people who post on here who think an opinion is the same thing as being informed.

    You people are so wrapped up in your own conspiracy theories about left and right that you can’t take a good long look at a policy and decide it on its merits.

    You need to first decide at what point education is no longer a full time role of the state. You lib Dems seem to think that it should be first degree level (as opposed to 18 as currently) but make no real argument as to why. Should the state support people through Master’s degrees? Phds? What is the difference?

    Scraping tuition fees may be a good campaigning message, but its crap policy.

  • John Champkin 2nd Dec '08 - 4:34pm

    is that wit or wisdom? or neither.

    Put your veritable intelligence to answering my question.

    At what point should the state stop paying for full time education and why?

    The arbitrary cut off is currently 18.

    Why should the state pay for first degrees but not second degrees or PHds?

  • John Champkin 2nd Dec '08 - 4:59pm

    Consider me off WW.

    Opinions are always valid, but they need not be worth anything.

  • Hywel Morgan 2nd Dec '08 - 5:08pm

    “Should the state support people through Master’s degrees? Phds? What is the difference?”

    It does – bodies like ESRC fund a significant number of post-graduate students.

  • David Allen 2nd Dec '08 - 6:54pm

    Julian Astle says:

    “The real reason why students from low income families are not going to university in greater numbers is because too few are achieving the exam results they need to apply. This fact is borne out by a recent study showing that, although the poorest 20% of students are six times less likely to go to university than the richest 20%, there is almost no difference between the participation rates of poor and rich students with the same A-level results.”

    I think the logic here is:

    Only those students who really want to go to Uni make the effort to get the good grades they will need to get there.

    The poorest 20% of students are six times less likely to make that effort than the richest 20%.

    That may well be, at least partly, because they are terrified of the debt that going to Uni involves.

    Once you’ve filtered out that tiny minority of poor people who are still motivated enough to get good grades, they do actually go to Uni, just like the rich guys with good grades. So what? You might as well say that most people in the High Street don’t wear a bike helmet, but wonder of wonders, it doesn’t matter whether they’re rich or poor, it’s the people with helmets who you’ll infallibly find are the ones who are riding on bikes!

    So Julian, you are happy to support a policy which promotes and reinforces the position that the poor are six times less likely to go to Uni than the rich. Which party is that you’re supporting, pray?

  • Perennially Bored 2nd Dec '08 - 9:25pm

    Why should there be an arbitrary cut off at 18, and why should we not be funding masters’ and phds?

    We are funding masters’ and phds, so the question should be reversed. Why should we be funding all education except that which takes place between 18 and 21/22 (or any age for mature students)?

    Also, I’m not sure it’s valid to distinguish between ‘poor people’ and ‘those with degrees’. I suspect that a lot of nurses/teachers/university lecturers earn a lot less than a lot of plumbers. And non-degree holders do benefit from the work of degree-holders, not just in obvious ways such as when they get sick or want their kids to go to school, and through inventions as has already been mentioned, but also through the general growth of the economy. If the recent bubble has taught us anything it’s that the financial sector – largely staffed by graduates – is crucial to the British economy.

    Having said all of this, I’m still not sure where I stand. Just pointing out the above to try and keep the debate as intellectually honest as possible.

  • Matthew Huntbach 2nd Dec '08 - 10:08pm

    Oranjepan

    “I would also like to point out my strong opposition to the government monopoly of HE as the reason why most HE institutions are unable to build up significant endowments or offer sufficient bursaries/scholarships.”

    Could you tell me what you mean by “government monopoly”? I am a university lecturer. I devise my own courses. The government does not tell me what I should teach in them. Other lecturers in my subject in other universities teach it in a different way with different emphases and a different mix of material. The government does not tell us what to teach. In what way is that a “government monopoly”?

    Any private institution is free to set up its own training programme if it wants. It can’t say it is an approved university, but it can train. So it’s not like there’s a ban on training.

    You seem to be suggesting that an end to this “government monopoly” would enable training institutions to charge vastly more than their training costs in order to build up huge investments, which they could then charitably hand out to needy cases. How do you suppose this would work? Are there any other businesses which do that? Are there, for example, supermarkets which overcharge on their food, so they can build up endowments and charitably offer free food to needy people?

    “This government monopoly has also showed itself incapable of sufficiently regulating examination boards.”

    Perhaps you could tell me what you mean by this. I am Chair of my university department’s examination board. The government does not tell me what to do in this capacity. Are you suggesting it should, are you supposing it does?

  • Matthew Huntbach 2nd Dec '08 - 10:23pm

    Most of the university students that I teach come from fairly poor socio-economic backgrounds. Most of them have very time-consuming part-time or sometimes near full-time jobs because they can’t afford to live otherwise. Most of them are of a Muslim/Hindu background, so don’t drink, so please don’t give me lines about them spending all their money on booze, they don’t.

    I know about their jobs, because they always anxiously scan the timetables, trying to see how they can fit their shifts in. If you change something to another time slot, they’ll all complain “I can’t, I do my job then”.

    The consequence of this is that they really aren’t full time students. They can’t fit the hours in that the degree ideally requires. I have to water down what I teach to accommodate that, but even so I’ve frequently seen good students dragged down and get poor class degrees due to financial difficulties. The, of coure, they are less likely to get those wonderful high-paying jobs Julian Astle is so sure they’re bound for.

  • In which case, Jock, we night as well downgrade them (back) to technical colleges.

  • Matthew Huntbach 2nd Dec '08 - 11:13pm

    Jock, yes I know about HEFCE funding. However, as I said, I am free to teach what I want and how I want, obviously within the limits that I have to teach my subject and the modules I’m assigned to teach. But there’s no national curriculum I have to teach to, or state-set exams I have to teach to. The phrase “government monopoly” suggest there might be. Currently I believe there is plenty of range of style and content in university degrees in my subject. In fact, as we have seen, universities are currently free to put on rather dubious trendy sounding degrees in order to attract students even when there is little evidence of real demand for the subject of those degrees (e.g. all these “Computer Games” degrees – employers in the computer games industry actually want red-hot programmers with good straight Computer Science degrees).

    Same unit cost as anyone else whether my lectures are any good or not. So what do you propose – government inspectors to tell me whether they are any good and pay me accordingly? Forget, by the way, student demand – my experience is that students go on “University X is better than University Y” in some strict pecking order, and that never varies and has nothing to do with the quality of education. Reality is that to a large extent university department are autonomous, so you can have a good department in a bad universty, and vice versa, but students hardly ever look at it in that way they rarely even look as low as individual department level. Let universities charge variant fees, and what will happen is that the ones at the top of the pecking order will charge more and use the money to fund their research, it won’t have any effect on teaching, or maybe they’ll use it to pay PhD students to do teaching so the profs don’t have to do any. It doesn’t matter, because students will tend to think the more they are charged, the better it will be, and the research impact pushes the universities up the league tables, and that’s what counts.

    Fixed unit costs per student mean all the incentive for universities is to get extra money from research, so lecturers are pushed to put all their effort into writing research papers and as little as possible into teaching. It doesn’t matter because if half your staff are spending all their time doing research, it makes the staff/student ratio look good, and the spending/student ratio look good (even if that spending is on research facilities), and that bumps the university up the league table, that attracts the students, good teaching doesn’t.

    The real currency for buying degrees is A-level points, but until students are more discriminating about teaching quality, there won’t be much incentive to improve it. At the top of the pecking order, they can take the students with top A-levels, and being bright they can mostly teach themselves anyway, so the universities can get away with poor teaching. At the bottom, there’s a scrabble to fill places at all, hence the desperate trendy-sounding degrees and high profile advertising campaigns (look how it’s always the unis at the bottom of the league tables that have the big adverts).

    So sure, I’d like to find a way to give more incentives to universities to offer good quality teaching, while I also do accept that being taught by people who are active researchers is a good thing. I currently think the incentives are way too skewed towards encouraging research (not always the best research, however, the RAE process tends to encourage safe research which churns out quantities of publications against more risky blue-skies research). But I don’t think a market in fees is going to do that – the current market in A-level points doesn’t. And I can tell you, having been my department’s admissions tutor for many years, the market in A-level points is a vicious and cut-throat one, because what every academic wants is to have students with high quality A-levels in the right subjects. Please don’t suggest there’s no competition.

  • Hywel Morgan 2nd Dec '08 - 11:36pm

    “I just had to decline a marvellous invitation to enjoy a companionable dinner with two of our great city councillors to look after 500 students all night!”

    Why do they need to employ people to look after adults?

  • julian astle 3rd Dec '08 - 11:43am

    Liberal Neil,

    You say (at 9.15 pm): “One of the problems with the current system is that it is directly regressive – the lower your graduate salary, the larger proportion of it you pay back”.

    This isn’t true I’m afraid. The whole point of the income contingent loan system is that it provides real protection for graduates on low incomes. That is why the £15,000 repayment threshold and the 9 per cent earnings link (as well as the 0 per cent real interest subsidy and the debt write-off provision) are so important.

    The result is that a graduate earning £10K repays nothing; a graduate on £20K repays £450, or 2.25 per cent of earnings; a graduate on £30K repays £1,350 or 4.5 per cent of earnings; a graduate on £50K repays £3,150 or 6.3 per cent of earnings; and a graduate on £100K repays £7,650 or 7.65 per cent of earnings.

    And because graduates on low incomes pay back less, they also receive more subsidy. Which is why graduates in the bottom income decile end up, on average, having more than half their debts paid off for them by the tax payer.

    For more information about the impact of fees and loans on graduates, see this IFS paper http://www.ifs.org.uk/wps/wp1807.pdf

    Then (at 9.29pm), you say that my claim that the the benefits of the Lib Dem policy flow largely to individuals at the top of the income scale is “another glaring factual error” because “Nearly all students are near the bottom end of the income scale”.

    But this too misses the point. The benefits of the Lib Dem policy don’t flow to students. They flow to graduates who, under Lib Dem plans, no longer have to repay their fee loans. So the important point is not really that students come disproportionately from high income families (which they do), it is that they tend to go on to enjoy relatively high incomes themselves. Precise estimates vary, but all studies conclude that the average graduate will earn between 15 and 30 per cent more over the working life cycle than someone with the next highest qualification (2 ‘A’ Levels). To give an idea of what this means, 25 per cent is equal to an additional £160,000.

    So yes, the benefits of the Lib Dem policy do flow to individuals towards the top of the income scale.

  • Perennially Bored 3rd Dec '08 - 11:36pm

    You say (at 9.15 pm): “One of the problems with the current system is that it is directly regressive – the lower your graduate salary, the larger proportion of it you pay back”.

    This isn’t true I’m afraid. The whole point of the income contingent loan system is that it provides real protection for graduates on low incomes. That is why the £15,000 repayment threshold and the 9 per cent earnings link (as well as the 0 per cent real interest subsidy and the debt write-off provision) are so important.

    The result is that a graduate earning £10K repays nothing; a graduate on £20K repays £450, or 2.25 per cent of earnings; a graduate on £30K repays £1,350 or 4.5 per cent of earnings; a graduate on £50K repays £3,150 or 6.3 per cent of earnings; and a graduate on £100K repays £7,650 or 7.65 per cent of earnings.

    And because graduates on low incomes pay back less, they also receive more subsidy. Which is why graduates in the bottom income decile end up, on average, having more than half their debts paid off for them by the tax payer.”

    Not really true.

    A graduate on a starting salary of £20k will pay back less per month as a proportion of total income than a graduate on £30k. They will, however, spend far longer paying it back, affecting their ability to e.g. buy a house.

  • julian astle 4th Dec '08 - 3:33pm

    Liberal Neil/Perennially bored,

    You both assume that paying off your loan quickly is preferable to paying it off slowly. But it isn’t. The IFS paper I pointed you towards explains why.

    On page 17, for example, it says: “The number of years taken to repay the loan (Fig. 6 and Table 4, panel c) is also decreasing in lifetime earnings – it ranges from 25 years for the lowest earners (at which point all outstanding debt will be written off) to between 10 and 15 years for the highest earners. The average time for repayment is around 17 years for women and around 13 years for men. Around 21% of graduate women can expect to have some debt written off, with their repayment capped at the 25-year cut-off, whilst this is the case for only around 2% of graduate men. These results all highlight the fact that the longer the loan is held by a graduate, the bigger is the taxpayer contribution to the repayment of that loan. This of course runs counter to a commonly held notion that holding graduate debt for a long time is an indication of the ‘heavy burden’ of that debt.”

    Counter-intuitive it may be but, from the graduate’s point of view, it’s better to pay back your loan slowly as you will receive more subsidy. Which is why a graduate in the bottom income decile who owes £9,000 in fee loans, will end up paying less than £4,500 while a graduate in the top income decile with the same debt, will end up paying more than £8,000.

    It’s a much more sophisticated system than the Lib Dems have ever understood/admitted. Not only are there generous grants and bursaries available to students who come from low income families, but there is a significant insurance element to the income contingent loan system to protect graduates who end up with low incomes themselves.

    With regard to your final point Neil, the fact that the income tax system is progressive, doesn’t mean that the poor aren’t subsidising the rich under the Lib Dems’ student finance policies. This is because more than half of government revenues come from taxes other than income tax. And since indirect taxes are regressive, they cancel out the progressive impact of the income tax system, with the consequence that overall, the tax system is quite flat (although, as Vince Cable regularly reminds us, the poor actually pay a slightly higher proportion of their income in taxation than the rich).

    However you cut it, I’m afraid the conclusion remains the same: the Lib Dems’ HE funding policies are regressive.

  • I’ll save my comments for the debate at conference, but it does seem like CentreForum have a knack for producing half-baked analyses that do little other than touch the surface in a seeming attempt to bring the party further to the right rather than to offer credible and fair policies.

    Just because it’s right-of-centre doesn’t mean it’s automatically progressive – that is something CentreForum and others in the party need to understand.

  • Dominic Mathon 6th Dec '08 - 6:53am

    Chris – I don’t think it’s particularly right of centre; I just think it’s wrong and ill thought out. It’s a classic of the “something must be done” school of policy-making, even when the “something” is a clear step backwards.

    I was filled with enthusiasm for the Centre for Reform (as it was originally) but my biggest concern with it these days is that for all its scattergun policy ideas, it seems to have no idea about or interest in politics or liberal philosophy, so it’s not really a lot of use to the party. It might as well be any other think tank … and we get much better ideas from our own Lib Dem policy working groups.

  • To be fair Dominic the party is not suffering from an excess of think-tanks and the Centre Forum is the nearest we have to a Liberal one.

    It is also not reasonable to judge think tanks by the standard of whether or not our famously risk-averse local campaign leaders can put it on a t-shirt without offending anyone. Good ideas are not necessarily easy or popular ones and real political leadership is evident in people who can sell difficult change, as well as easy populism like the party’s tuition fees policy.

  • Hywel Morgan 12th Dec '08 - 11:41am

    Apparently studies by Swansea University estimate the lifetime benefit of a degree at £22,000.
    http://www.guardian.co.uk/commentisfree/2008/dec/12/pre-budget-economy

    Something which might change a lot of the assumptions underlying the various policy claims.

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