Willie Rennie makes fair student finance a Scottish budget priority

There is no doubt that Willie Rennie is being brave in his choice of priorities for this year’s Scottish budget. In truth, the SNP have an overall majority at Holyrood so they don’t need to give any sort of ground.They have done the last few years, though. Last year, they gave extra money for childcare and free school meals in response to Willie Rennie’s persistent pestering. The year before it was college places.

This year, he’s taking a bigger risk. There’s an issue which in the context of the Holyrood parliament represents one of our finest hours and in the context of Westminster our worst. It’s tuition fees. Way back in 1999, Liberal Democrats fought an election saying tuition fees would be dead if they were in government and they kept that promise. We know what happened in 2010. We shouldn’t have done what we did, but, as I wrote at the time, Vince had actually managed to create a system that was fairer than the one it replaced:

However, if there were a way to get it wrong well, he’s probably done that.

Imagine for a moment if the Tories had been in power alone. I very much doubt that their Business Secretary would have tracked down Lord Browne and bent his ear about the importance of the recommendations being fair and progressive. And they are to a point. To play Devil’s Advocate a bit here, if we can’t have no tuition fees (and I’m not conceding that we can’t), then isn’t this a better option than anything else? Nobody has to pay out anything to actually go to university so access isn’t denied to those from less affluent backgrounds in the way it would be today.

And Labour? Would they, still in Government, be talking about a Graduate Tax? Of course they wouldn’t. They’d bung on the fees – although I’m not so convinced that they would have necessarily covered all the angles.  I mean, it’s coming to something when it takes a Tory to bring up the issue I blogged about earlier about interest accruing if someone takes time out to look after children. He confirmed in the House today that interest would not accrue under these circumstances.

Annoyed though I might be with him, I have to at least give some credit to Vince for taking an hour’s worth of utter tripe from the Labour benches with patience and humour. I’d rate him above just about any Labour minister you might care to mention and definitely any Tory. I loved his line about the road to Westminster having the skid marks of unenacted pledges all over it.

You may not be aware that graduates in England don’t start paying back their loans until they earn £21,000. In Scotland, the threshold is £16910. This means that Scottish graduates start paying back when their income is more than £4000 lower than those in England. Willie has calculated that if the Scottish Government raised that threshold to £21,000, Scottish graduates would save £368 per year. That’s several months’ council tax. for example.

Willie knows fine that he’s going to get a barrage of flack, but he’s found a way to show that the Scottish system isn’t perfect and the English one is fairer to those on low incomes. He said:

For higher education students, we think the opportunity exists to help graduates by increasing the threshold for student loan repayments. Liam McArthur has discussed this point at the Education Committee. The Scottish Government has substantial Resource Accounting provision to provide for the future costs of student loans. This support has been subject to the Barnett Formula and so reflects the more generous starting threshold in place for graduates in England.

Education spokesperson Liam McArthur said:

We are calling for the SNP Government to increase in the repayment threshold for graduates in Scotland to be brought closer to, and eventually match the threshold in England.

The disparity in repayment thresholds between Scottish graduates and their peers in England is down to a choice made by the Scottish Government. The Scottish Government has the ability to match the English threshold of £21,000 without any effect on their spending power.  But currently graduates in Scotland begin repaying their loan when they earn over £16,910.  Our fairer proposals would put more money back in the pockets of low and middle income graduates.

We will pressing the SNP Government to adopt this costed and sensible move in this year’s budget.

The SNP made a bit thing of pledging to dump student debt in 2007 and then apart from abolishing the graduate endowment with Lib Dem support in their first term, they didn’t do much else.

They have increased levels of student financial support in recent years but going people more money to in those early years of their working lives has to be a good thing.

Having spent the entirety of the year moaning that it hasn’t enough money and it’s all evil Westminster’s fault, they managed to underspend by £444 million. It’s not as though there’s a lack of things they could have done with it. Too much referendum campaigning and not enough governing, clearly.

Trying to find a way to reframe what for us a very tricky subject is not a risk free enterprise. It would have been much safer to have called for more mental health beds for young people in the north east, for example. We’ll have to see if it pays off.

 

 

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings

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8 Comments

  • As Scottish students (studying at Scottish universities) don’t pay tuition fee’s, they only need student loans to cover their maintenance costs, unlike English students who generally take loans covering both. I’m not convinced that Scottish students are being unfairly treated by being asked to start repaying at a lower earnings threshold.

  • Mark Inskip 18th Jan '15 - 6:52pm

    “You may not be aware that graduates in England don’t start paying back their loans until they earn £21,000. In Scotland, the threshold is £16910. ”
    That isn’t correct. Today graduates in England on the previous student loans system pay back from £16,910 for this current financial year. That threshold is due to rise each financial year and is likely to hit around £18,000 in 2016/17.

    Graduates under the new system in England will start paying back in 2016/17 at a threshold of £21,000.

    Also graduates in England will have much larger debt under the new system and that debt will grow at RPI+3% per year. For that reason most graduates are forecast to be paying back for 30 years.

  • Under the old system graduates usually repaid their debts by the time they reached 40. Under the new system they are still repaying into their 50’s with each graduate in debt to the tune of £44,000 on average. Give me the old system any day. I managed to pay mine back early on a below average wage. I pity current graduates with that huge debt hanging over them for 30 years accruing interest at RPI plus 3%.

  • @Mark.

    I agree, We cannot overlook the fact that Scottish students don’t pay tuition fees, but English students do. English students at Scottish universities do pay fees, however, even though a student from France studying at a Scottish university, for example, wouldn’t pay fees because they are from another EU country. Confusing isn’t it – not to say a bit unfair?

    Also some students only have 10 hours of tuition a week – or less – while some have 25 hours of tuition a week but all are paying the same fees. I suppose there is no way around that, but there is an element of unfairness here in terms of comparable value for money. A student with 24 weeks of teaching a year(the average ) and 10 hours of lectures/ seminars is paying around £40 a lecture – I think that’s quite a lot – and that’s before the added interest.

    Finally, I have read that it might not have cost any more to charge English students £6,000 a year because the Government has had to borrow such enormous sums of money to lend the new higher rate of fees to students with little hope of recovering a fair proportion of the debt, actually putting the Government seriously out of pocket.

    We need to get a grip on the situation, so English students are not so disadvantaged compared to their Scottish counterparts. I think the same applies to students from Wales and Northern Ireland.

  • “Having spent the entirety of the year moaning that it hasn’t enough money and it’s all evil Westminster’s fault, they managed to underspend by £444 million. It’s not as though there’s a lack of things they could have done with it. ”

    I think we need to urgently educate government (and wannabe politicians) out of the mind set of overspending the budgets allocated to them and only spending what is necessary to discharge their duties. I hope the LibDems are calling for Holyrood to do the right and honest thing and return this surplus monies to the UK Treasury as a contribution to deficit reduction.

  • Before people in LDV get too excited about an underspend of £444 million can we put that figure in context?

    Government spending is measured in Billions.

    For example – the Government is spending more than £100 BILLION on decommissioning useless nuclear power stations.

    In reality this is a huge subsidy to the privatised nuclear power companies.   But it possibly makes the less than half a billion underspend mentioned in this article seem  little less dramatic.

    Don’t get me wrong — I would love to have a £444 million underspend in my personal Bank Account but to Her Majesty’s Government it just amounts to a few birthday helicopters for the Queen’s favourite grandson.

  • JohnTilley – Totally agree about the £444m in the overall context of UK government expenditure, but we should not forget just can be achieved with this budget when used wisely…

    However, there is a principle here concerning government expenditure. and mindset’s. We’re already seeing the end of year spending bonanza as various government departments starting to throw money around, just because of the “spend it or loose it” culture. And as we see due to poor accounting practises an underspend can quickly become a £1bn overspend – as has happened at the Department for International Development… Add on this all the largesse politicians are starting to throw around in the run up to the election and we can see government hasn’t learnt lessons from the 2007/8 financial crash and the circumstances that meant the UK Treasury was more exposed than it needed be; if it had kept it’s eye on the ball and been “prudent”. Remember the next administration will inherit larger debits than this one did in 2010…

  • I agree with Roland about good budgetary practice, though in fairness I believe most Whitehall departments have underspent their DEL allocations during this parliament – indeed, the Chancellor has taken to relying on these underspends (locking them in, as the IFS puts it) to help make his sums add up at Budget/Autumn Statement time.

    This is in contrast to what happened under the last govetnment, and some credit is due to Danny Alexander here since the Chief Secretary bears much of the responsibility for making sure departments stay within agreed budget limits.

    On JohnTilley’s point about £444 million being almost a rounding error in the context of annual government spending of more than £700 billion, you are of course right – but, to adapt the old American political saying: a hundred million here, a hundred million there, and pretty soon you’re talking real money!

    And the comparison with nuclear decommissioning costs is tendentious, since it conflates an annual figure for a budget underspend with a cumulative total built up over many years. I presume you are not contending that the government is spending more than £100 bllion per year on decommissioning power stations…?

    We see many of the same exaggerated claims made about the cost of Trident and the potential contribution that scrapping it would make to deficit reduction. (Don’t get me wrong, Trident certainly is expensive… just not as expensive as its opponents tend to make out.)

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