One year on from what remains, for many Liberal Democrats, the most traumatic decision yet taken by the coalition, the FT (via an editorial in the newspaper) has provided its assessment of the policy.
Here’s what the newspaper says on the policy itself:
Many academics and students continue to grumble about the move to charge undergraduates for their tuition costs. But governments looking for ways to reduce their outgoings should consider raising such charges – so long as they do it fairly, as the UK has.
It is a big concern that high college fees – and the fear of them – prevent middle class families in the US from getting the most out of higher education. Even where generous support exists, it can be difficult to understand.
This is a problem: it is a hallmark of an open, liberal society that class, privilege and prestige should not be hereditary. If charging more meant that poor children turned into poor adults, it would not be acceptable.
But governments cannot simply ladle cash out to universities – not least because good universities should answer to students, not finance ministers. In any case, the main beneficiaries of education are the people who receive it: they really ought to pay.
There is a way to square the circle. The UK government uses a method of funding universities whose principles could profitably be replicated around the world – the so-called “income contingent loan”. UK students are all eligible for a state loan, so none must find cash up-front. Repayments are due only when graduates can afford it. If they fall out of work or take a low-paid job, the repayments are paused and the interest rate drops.
And here’s what the newspaper says about the role the Liberal Democrats played in taking the decision:
Sadly, support for raising tuition fees has been toxic for the Liberal Democrats, who dropped their admittedly overly strident pre-election opposition to the policy. The party’s poll ratings, which had been in the 20s before the May election, crumbled throughout 2010 to a plateau of about 10 points.
Most of these voters had probably abandoned the Lib Dems before the controversy over tuition fees. But the reversal on student fees has damaged Nick Clegg, party leader, especially among the rank-and-file. (It is not obvious that the Conservative leadership has made a sacrifice of similar size for the coalition)
The FT’s conclusion:
Voters may not thank them for it, but the fee and loan system is a policy legacy of which the Lib Dems can be proud. In an age of political timidity, Nick Clegg’s decision was correct – and courageous.
You can find the whole piece here.
* Nick Thornsby is a day editor at Lib Dem Voice.
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32 Comments
If it is so good then it should be made retrospective.
Then see how popular it is.
Timak: it’s not about policies being popular, it’s about policies being good. And it is a good policy: far better than redistributing funds from the poor to pay for the education of the wealthy and cementing our social strata.
Timak – As a current student under the old system, I wish it could be made retrospective. Unfortunately, that really would not be right: the fees that have been paid by the Secretary of State on my behalf have been at a rate just over £3k pa, so if the repayments system were enforced on me then I would receive an unfairly good deal.
I suppose in principle if the government got my agreement it could increase my notional debt accordingly in exchange for moving me to the new system – but there would be significant costs associated with doing so (both administrative and from the change itself, since it would cut my repayments). It’s not clear why the government would want to go to the bother. It would also be problematic because the education I receive is given on the basis of £3k fees – I’m rather hoping my SU will have more success in pushing for improvements to courses as £9k fees become the norm (as they definitely will at my university unless OFFA intervenes, which I doubt it will).
I agree with Stuart, as a student under the old system, i wish i could be on the new one.
I also agree with Stuart.
I think it was wrong as a matter of principle to break the pledge but there’s no doubt that the new system is much fairer.
I’m sorry but this is risible in the extreme, especially this: “In any case, the main beneficiaries of education are the people who receive it: they really ought to pay.” Bwahahahahahah no. Education benefits society because it benefits individuals; universities do not exist to aid commerce or create wealth, they exist to create people who can think. And the ruthless commodification of further education which has taken place over the last 30 years has degraded and debased the nation’s universities to the level of their American counterparts, institutions who are forced to prostitute themselves to the bloated wealth of corporations, millionaires, billionaires and sundry other Cash Spigots of the Elite.
The truth is that we need to return to the student funding model which prevailed prior to the Thatcher government, if we are actually serious about fair access to further education for all based on merit. That is all.
Unfortunately, to accept that Clegg’s decision (as opposed to the policy itself) was “correct”, one must accept that a firm, personal pledge given by a parliamentary candidate can be set aside within months of said candidate being elected, without reference back to the voters, and without any radical change in circumstances to justify it. Bit hard for a democrat.
The FT clearly knows SFA about real world politics
What Malcolm Todd said.
And in addition: For those (like the FT) who think that the tuition fees policy is something the Lib Dems should be proud of, do they also think Clegg should be proud of signing the NUS pledge during the election campaign?
Interesting read, however this is a precis of the FT piece and not really an article by Mr Thornsby? lol
@Toby MacDonnell
“And it is a good policy: far better than redistributing funds from the poor to pay for the education of the wealthy and cementing our social strata.”
Wrong. Under the old system, HE was paid for using (mostly progressive) taxation. So those that went to university and went on to earn ~100k more over their lifetime compared to non-graduates more than paid for their own HE given the level of taxation on that extra 100k. The poor did not subsidise the wealthy. Those that worked hard and went to university paid their tuition back over the course of their lifetime from their increased earnings.
The current system is not fairer than the previous system. It is regressive in the strict sense. Those that earn above average graduate earnings pay back less as a proportion of their incomes (and also less in absolute terms) than those on average graduate earnings. We have moved from a system that distributed the burden of paying for HE fairly to one that allows those on very high incomes to contribute less to the funding of HE. The new system is in no uncertain terms a tax-cut for rich graduates and non-graduates, given the corresponding 80% reduction in the teaching funding that was previously paid for with progressive taxation.
In summary – we have moved from a progressive taxation regime to a regressive taxation regime (that falls almost completely on those that go to university) to pay for HE. It is a tax-cut for the rich – to try and claim that the new system now prevents the poor from paying for the rich is the complete opposite of what has in fact happened.
How would you pay for that? Or would you also like a return to the inflation of the 1970s?
There was a “reference back to the voters”: i.e. the general election of 2010. And at that time the country refused to back the Liberal Democrat’s election manifesto, including the promise on tuition fees. Hence the coalition negotiations, which involved sacrifices on both sides.
Well, I’m afraid Steve is wrong too. The graduate loan system is not “regressive in the strict sense”. It’s more complicated than that.
Essentially, there are two stages: at the low end of the income distribution, you don’t pay off the loan, and the balance is written off after 30 years. This is then effectively a flat rate 9% tax on income over £21,000. As your income increases from the starting point of £21k, the amount that you pay increases (both in absolute and percentage of income terms). Which is the definition of progressive taxation.
BUT, you eventually reach a level of earnings where your repayments do repay the loan. Above this point, you repay the loan faster and so incur less interest and so pay less in absolute terms and therefore it does start to fall as a percentage of income too. So it does flip over and become regressive.
So it’s *partly* regressive, not *strictly* regressive.
The point of flip over is actually quite high. I think – I haven’t done the calculation recently – it’s about twice average earnings. It depends on interest rates, which are variable, and on the initial level of the loan. The irony here is that a *higher* initial loan pushes the turnover point higher, making the graduate loan closer to a progressive graduate tax.
(And lowering the loan for fees benefits *only* the richest, who pay off the loan sooner – which is why Ed Miliband’s promise to cut the fees to £6k is both a slap to the universities AND a tax cut for the rich.)
The FT is the best newspaper in the UK. But higher education is emphatically not their strength.
Even David Willetts is now admitting in public that the Browne Review was poor – check out the THES.
All those cheerleaders for the Lib Dems saying they wish they were on the new system – graduates are almost all going to have to pay for the full 30 years, and the Government reserves the right to change the terms and conditions of the loan repayment system at any time without notice and consultation. Ask public sector workers if Governments are prone to renegotiating public payment schemes.
There is exactly no chance that 2012 graduates will find the repayment terms unchanged throughout their working lives, especially as the revenue likely from the system is now universally accepted to be lower than anticipated and will leave a black hole in university funding at some point in the future. Cable and Willetts hope Labour will be in charge when this happens and are forced to up the interest or repayment rates – but the financial projections suggest it’s likely that the next Parliament will see problems for the system.
Chris: if the student debt fees conditions change over the course of the coming years, will we not funcationally have a tax which takes from the rich people with degrees, and uses the money to finance the scholarship of those worse off?
If it were to be an outright tax rather than a student debt, all those rich people who are very good at avoiding taxes would simply dodge it: those same rich people are much better at living up to their debts.
I am afraid that the rights or wrong of the policy are fairly irrelevant when it comes to winning people’s votes. Our leadership completely mis-sold this policy change to the public and we will pay for it in our University seats at the next general election
The Tory higher education spokesperson should have led it – not Vince and Nick
They should have called it a Graduate Tax – which effectively it is – and not got caught up with the pedantic argument – “well its not a tax it is a contract – that way we can get people that move abroad to pay it as well.”
Vince and Nick should have said “We dont like it – it is a Tory policy – but for the sake of a stable coalition to deal with the economy we will accept it for now”
Steve: Pardon me for missing your comment earlier. Student fees will always go towards financing the debt incured by supporting students with tutition and living costs. A graduate tax would go into the big pot of taxation money, and be put towards a dozen different projects, much as road tax does. I doubt the old system really supported university costs: in fact, it’s pretty clear that universities were financed beyond the government’s means to repay, hence the cuts a lot of universities are having to make in the transition between tax-and-spend to debt repayments.
Perhaps there has been a tax cut for the richest, but that’s much less important than the gap between the poor-by-comparison-to-top-earners and the genuinely poor.
However wonderful the FT may be, I think we need to wait and see what happens to student applications before the policy is pronounced a success or failure!
@Mike Cobley:
” universities do not exist to aid commerce or create wealth, they exist to create people who can think.”
If that’s what they think in Universities, where can we send them to learn to think?
I have been to three Universities and found the experience very rewarding. I learned to think between the ages of 10 and 13.
“support for raising tuition fees has been toxic for the Liberal Democrats,”
“the fee and loan system is a policy legacy of which the Lib Dems can be proud. In an age of political timidity, Nick Clegg’s decision was correct – and courageous.”
So is the FT saying that Nick has poisoned the party (possibly fatally) for the sake of one policy? That’s not courageous that’s stupid.
@Toby,
Only university graduates pay an excess to fund HE? So you think it’s good that, to pick an arbitary example, John Terry pays less in tax than a young science researcher towards the education of the UK’s kids? John Terry’s a lot better off, can afford it more, and his kids could well go to university. But he won’t be paying the same share as the people teaching, nursing, and researching.
As so much of our future economic success is based on a necessary output of university graduates, it seems a bit rich to charge them for the privilege of hauling us out of the economic hole we put them in, and then canting that we don’t want to leave them debt. They’re not stupid, students can see that that line of argument is drivel.
At what point did the Lib Dems decide that higher education was a luxury? Was there a vote? It certainly wasn’t policy at the last election – you would be nowhere near Government if it had been.
@Toby
“in fact, it’s pretty clear that universities were financed beyond the government’s means to repay”
Factually incorrect. The Government is perfectly capable of financing universities to the same level or better than the previous administration. It simply *chooses not to*.
Why?
@ Lee Dargue
We generally find it useful to highlight on the site pieces from across the media that are relevant to the Lib Dems. Nobody can read every blog and newspaper every day, so where pieces like this appear that are specifically Lib Dem-related and offer a new insight, we try our best to give a sample of them and provide a link.
I think it’s quite clear from the headline to this piece that it’s going to be a summary of something said by the FT rather than a piece of original writing by me.
It’s nice to see the FT praising Nick Clegg’s “courage” but they miss the point that this wasn’t just one manifesto item which had to be sacrificed in coalition, it was a very specific pledge backed-up by publicly signing a petition and coupled with a general message which said – literally – the Lib Dems are different because we keep our promises.
The manifesto pledge was over the top – we musn’t forget that in the good old days far fewer HE places were available. It’s lucky the Party didn’t make any other promises on the assumption that it would never achieve power so wouldn’t have to honour them. Did I hear something about a referendum on quitting the EU?
@Joe
I’d pay for it through general taxation as a public good. There used to be a political party in the UK that was pretty strongly in favour of that kind of policy. I wonder what became of them?
Sinc FT is paywalled, might someone with access produce the extract so that we might comment on it in an educated fashion? I presume such extraction of specifics does not breach copyright.
@ Tony Dawson
The FT request that one doesn’t reproduce pieces from the newspaper in full. I have, however, reproduced most of the article above. Also, the FT is not pay walled in the same way that The Times is, in that if you register (for free) you can read several articles per month without paying anything. So if you were to register today for the first time you could read the above piece in full on the FT website for free.
Don’t forget that it was also a pledge to introduce a fairer alternative to the existing fees system. With a proposal to raise the cap (now changed from an absolute debt cap to a maximum tax liability) which also meant that poorer students would get more support, and poorer graduates would pay less, it was technically impossible not to break the pledge.
@Chris Riley
“At what point did the Lib Dems decide that higher education was a luxury?”
Whether you consider it a luxury or not, it’s still got to be paid for. If you are forced to take control of your payments you have the power to make education providers more accountable for the service you get, while engaging in this process helps increase the value of your education.
It is precisely because LibDems think education is so important that we argue people must make the most of the opportunities on offer.
@libby
“I am afraid that the rights or wrong of the policy are fairly irrelevant when it comes to winning people’s votes.”
Pretty much: we’ve ended looking like we’re saying to people who place strong value on qualifications that they’re stupid, and we’ve followed that up by looking like we’re telling people who don’t like the new method of paying for it that they can’t do maths.
It was the original unmitigated PR disaster, for sure – you won’t convince anyone by telling them that they are bad or wrong… even if you think that may be true.
I favour free lifelong education funded by progressive taxation. If there are problems with wealthy people avoiding payment of that taxation then close the loopholes. The FT article seems to be based on an assumption that it is only the student who benefits from education and therefore students should foot the cost. But I would hazard a guess that the majority of British graduates do jobs that result in a low-to-medium salary. Most of those jobs (healthcare, teachers, legal personnel, local government) are essential to running a decent society. The figures for graduate salaries are distorted by a relatively small number of high earners. I have a view that the majority of high earners got their through family background, connections, luck or (maybe) lots of hard work; their degree was not a major factor in high-earning jobs. Do you even need a degree to be the director of a bank or a stockbroker? If paying for one’s degree really is the moral duty that supporters of the new system tell us it is, then I look forward to hearing that the cabinet ministers are stumping up the cost of their tuition fees that were paid by the state in the 1970s and 1980s. But they are not going to do that, are they? They do like a freebie!
Ah, the mythical UK when Universities were free…..
Except basic income tax rates were 33% – 35%, and student grants were means-tested & just 10% of school leavers went on to HE.
Since when has University been “free”.