Vince Cable: Labour’s tuition fee plan is “financially illiterate”

Commenting on today’s announcement from Labour, Vince Cable has said:

Labour’s policy is based on a soundbite, and as a result, is completely financially illiterate. It will do great harm to universities and create a costly black hole in the national budget.

For a party presenting itself as a government in waiting they are showing staggering ignorance of how university finance works.

Talk about the current system being unsustainable is rubbish. The OECD, who has no political axe to grind, said the English system is totally sustainable and works well.

A £6,000 cut would wreck the financial sustainability of universities, reduce the support for disadvantaged students and benefit only the richest.

We learned this lesson the hard way but we now have a system that works, with university funding made fair and sustainable by Liberal Democrats.

This shows in a record number of students and a record number of those from disadvantaged backgrounds applying to university.

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33 Comments

  • stuart moran 27th Feb '15 - 5:27pm

    Vince, I am afraid the whole of this policy is financially illiterate and ridiculous

    The 9000 is a made up and fictional number. No-one knows how much will be paid back and it seems to be mainly sold on the fact that it isn’t ever going to be by a vast majority of students

    The black hole is an imaginary accounting one because in the end HE costs the same whoever pays for it – the lower the number is the more clarity it has on what is the Government contribution

    If HE adds value then it is a good investment for the country and we should be okay borrowing to fund it – and don’t give me that sad and pathetic argument about non university attendees paying – it is one of the saddest things I have seen seeing Lib Dems speaking like that

    Perhaps when 10% people went to university it had some merit but not now

    Oh, and if you don’t think that HE adds value of any kind then why are people doing it!

  • David Faggiani 27th Feb '15 - 5:32pm

    It’s really weird, and grimly impressive, the way the Lib Dems have started using the Tuition Fees issue in the last week. Who would have thought even last month we’d be vocally taking on Labour on this, rather than standing sheepishly by hoping everyone would forget our involvement? If this works (and I do at least prefer it to endless apologies, auto-tuned or otherwise) it will be a remarkable feat of political judo!

    However, we’re also sounding pretty ‘Coalition Continuity’ on the issue. Sliver of light between us and the Tories be too much to ask?

  • Mike Barnes 27th Feb '15 - 6:25pm

    “Labour’s policy is based on a soundbite, and as a result, is completely financially illiterate. It will do great harm to universities and create a costly black hole in the national budget.”

    The only difference is the timing of the black hole. Labour’s opens straight away, the coalition’s black hole appears in 30 years time when only a small minority of people have fully paid off the their loans. But who cares about the long run.

  • Weren’t we told by Vince that 6,000 would be the norm with 9,000 only applying in exceptional circumstances?

  • Political judo? Are you sure it isn’t political seppuku?

  • Little Jackie Paper 27th Feb '15 - 6:38pm

    1 – ‘A £6,000 cut would wreck the financial sustainability of universities’ Should that be a £6k CAP? It would, of course only be a threat if that money was not made up by, for example, general taxation.

    2 – I’d have to question the financial literacy of saying in one breath that debt is a threat to the national fabric then in the next saying that these tuition debt levels are all A-OK.

    3 – ‘create a costly black hole in the national budget’ Surely the debt write-offs are a hole in the 2032 budget?

    4 – ‘the English system is totally sustainable’ I can only hope that time proves Vince right and doubters like me wrong.

  • “A £6,000 cut”

    It is not a £6000 cut !

    Goodness me, I would have expected Vince to at least get te basics right before giving his opinion.

  • ….We learned this lesson the hard way but we now have a system that works, with university funding made fair and sustainable by Liberal Democrats……

    Will this mean a rewriting of Nick’s bit hit; I’m looking forward to …”I’m NOT sorry…etc”

  • Vince Cable: “A £6,000 cut”

    Has maths changed since I was at university? I’m sure I was taught that if you reduce something from £9,000 to £6,000, that’s a £3,000 cut, not a £6,000 cut. And Vince accuses others of “financial illiteracy”..!

    Vince’s response has to be the most impotent I’ve ever heard. Elsewhere he’s reported as calling Labour’s plans a “tax on pensioners”. How many “pensioners” are earning £150,000 a year AND still busily saving in pension schemes? I know life expectancy is increasing, but that’s ridiculous.

    “We learned this lesson the hard way but we now have a system that works”

    This represents a big change in the Lib Dems’ narrative on tuition fees. Up to now, they’ve been claiming that the current system isn’t what they wanted but they were forced to “compromise” with the Tories. Today, that version of events appears to have gone out of the window – Cable seems to be arguing that the system as it exists now is the best thing since sliced bread.

  • Germany has just abolished tuition fees.

    I’ve been wondering what I would have done had tuition fees been at that level when I was in the sixth form. I come from a working-class background and I certainly wouldn’t have contemplated attending a British university. Oxford, where I got my first degree, would have been out of the question. (I know the argument that it’s a graduate tax but the argument is false because the tax is not progressive; the richest pay it off most quickly and it’s those in professional jobs in the public sector who pay back most, once the compound interest is calculated.) I’m not a great linguist but I suppose I would have tried my best to learn a European language well enough to study abroad. The fees and living expenses are much lower in most European countries and some charge no tuition fees at all; Germany has just abolished university tuition fees.

    Because of the debt, I didn’t encourage my children to go to university but left the question open. Fortunately for them, they managed to start before the £9,000 fees came in. Had they faced fees of £9,000 a year I might have actively discouraged them. Debt is detestable and a burden – and once students are indebted it’s easy enough for governments to sell on the debt or change the repayment terms. Both possibilities have been actively discussed in the term of the coalition government.

    I place a very high value on education and work in higher education. I try to do my best for my students, who incur such enormous debts in order to study. But while vice-chancellors, who are paid well, often defend high fees, I and many of my colleagues are sickened by them. The increased fees never seemed wise in economic terms either – and now it’s apparent that they will cost more than the system they replaced . But apparently giving in to tory ideology and surrendering stated principles was reckoned a fair exchange for some seats in cabinet.

  • The details appear not to be available yet but one of the real problems with this is if, as appears, Westminster raids Scottish pensions to reduce the cost of English fees when Scotland funds its own fee regime with its own money. Potentially, this could add to the amount by which Scotland subsidises the rest of the UK.

  • In 2010 Clegg, Cable , etc said £6k would be the norm. Now it’s labour policy and they are criticising it.

  • @Jackson: “In 2010 Clegg, Cable , etc said £6k would be the norm. Now it’s labour policy and they are criticising it.”

    That’s what they were saying in October 2010. Don’t forget that six months earlier they were saying that £6K would be an appallingly high amount.

  • David Evans 27th Feb '15 - 7:21pm

    Sadly Nick breaking his pledge and increasing Tuition fees to £9,000 was electorally illiterate. As a result, students, their parents and grandparents don’t trust Nick. David Cameron said he would protect Winter fuel allowance and Free Bus passes for pensioners and he did. As a result, pensioners trust Cameron. Ed Milliband is saying trust me, I will cut fees. Do you think there is the slightest chance that he will break his word?

  • Philip Thomas 27th Feb '15 - 7:29pm

    I can’t help thinking that Liberal Democrats making speeches about tuition fees is exactly the outcome Labour had in mind when they decided to push this issue. Call them short-sighted cynical and opportunistic if you like. Now if only they could show similar skill against the SNP.

  • Philip Thomas 27th Feb '15 - 7:32pm

    @Al pretty sure it is the rest of the UK subsidising Scotland, actually. Scottish free tuition is paid for by British taxes via the Barnet formula which gives disproportionate funding to Scotland. Labour’s adjustment would slightly redress this imbalance.

  • Jackson 27th Feb ’15 – 7:01pm …..In 2010 Clegg, Cable , etc said £6k would be the norm. Now it’s labour policy and they are criticising it…..

    Another example of why, in pontificating about tuition fees, we just make ourselves look foolish……

  • The LibDems need to stop biting every time tuition fees are in the headlines. To the general public they can’t win, they were the party that broke their pledge. The Tories are getting a complete free ride on an unpopular policy that was their idea in the first place. This will get Labour votes, although I think they missed a trick – they should have said they would scrap them completely. I’m all for oversea’s aid, but if it was a choice between that or putting millions of young british people in debt for most of their lives, I’d stop it tomorrow.

  • paul barker 27th Feb '15 - 9:00pm

    On Labour list, the rough Labour equivalent of LDV, comments on the plan seemed to fairly equally split between support, opposition on similar grounds to ours & opposition because Fees werent being abolished. In the upper echolons of the Labour Party there seems to be stubborn opposition, the reason why it took so long to reveal the details. All the Fee cuts supporters seem to be on LDV.

  • As I mentioned on the other thread – Vince’s comments were made several hours BEFORE Labour had even announced the full details of their policy. Yet “Newshound” bills his remarks as “commenting on today’s announcement from Labour”. Is Vince a time traveller?

    Vince’s main criticisms – that the universities would be starved of funding and there would be a big hole in the public finances – have since been rubbished by the Institute of Fiscal Studies, who had the advantage of commenting AFTER Labour’s announcement.

  • @Simon
    Of course Labour trailed some of the more appealing parts of their policy for maximum impact – I saw it myself on BBC Breakfast this morning. But there were many other major details that only came out hours later. Most of Vince’s comments make no sense whatsoever in the light of the full announcement.

  • If the Tories had presented this idea, what articles about it would we be reading on here right now?

  • Peter Watson 27th Feb '15 - 11:32pm

    Apparently, back in 2010,

    Mr Cable said: “We are looking at the proposals carefully and considering a tuition fee level of £7,000.”

    (http://www.bbc.co.uk/news/education-11542793)
    Who’d’ve thunk it?

  • @Peter Watson

    Good point.

    So the proposal was for a cap of £7k which was deemed unfair so

    The cap was set at £9k instead !

    Don’t forget also that Labour has increased the level of the maintenance grant by an extra £400 pa for those that need it – typically the students with the lowest income. That will make a big difference to many.

  • @Simon Shaw
    “Are Guardian reporters ‘time travellers’ as well?”

    There isn’t a single extra detail in the Guardian article. Not one. If you’re claiming there is, please quote it.

    For instance, no mention of the extra maintenance grant for poorer students. Incidentally, do you support that?

  • Simon Shaw

    Why would there be less bursaries when universities will still get the same money?

  • @Simon
    As Malc says, can you please explain why there will be less bursaries.

    Can you also answer my earlier question, from 9:06?

  • @Simon
    I wasn’t even trying to make a point particularly, I just wanted to get some idea of what you actually want from a student finance system.

    Because after reading what must be thousands of words from you on the subject, I still haven’t the faintest idea.

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