Monday 20 December 2010

"Facts on fees and the fallacies of ‘fairness’" by James Vernon

A photo from the "I wouldn't be here!" (if tuition fees were raised) photo campaign by students supporting the University of Kent Occupation, the last UK student occupation standing and intending to keep going through the festive season. Please support the students in any way you can. Here are links to their Facebook page and Twitter feed

DEFEND the ARTS and HUMANITIES republishes James Vernon's article "Facts on fees and the fallacies of ‘fairness’", first published at on December 19, 2010:

What is the real nature of the government's legislation on higher education; what will be the consequences; and what relationship does it have to reducing the deficit? An important exchange on this issue is taking place here, between Alan Finlayson and Tony Curzon Price. Now a striking contribution with strong claims has been submitted to OurKingdom.

The Coalition’s narrow victory in the vote on university tuition fees will surely not mark the end of the debate or of student protests. And nor should it.  Despite the Labour Party’s eleventh hour adoption of a position mostly intended to embarrass the Liberal Democrats the level of debate in the House of Commons mainly served to emphasize the poverty of our current parliamentary politics. A greater diversity of opinion and sophistication of argument would be apparent in almost every student union debating chamber.  As Ministers ignore or seek to criminalize protesters they ingeniously insist that they will listen to arguments.  So here are eight facts about fees and their fairness that we have heard remarkably little about.
  1. The cut of 80% - with 100% in art, humanities and social sciences – for teaching in the higher education sector is considerably in excess of cuts in other areas of government expenditure.  It is supposed to a save a total of £2.9bn for the exchequer, a paltry figure when compared to other areas of government expenditure.  In the league tables so beloved of our current generation of politicians it places Britain at the bottom of its OECD competitors in terms of levels of public investment in higher education.
  2. This draconian cut will not save money for the exchequer in the short term. Any saving will have to wait until students in the class of 2012 pay back their loans which The Independent reports even the Department of Business, Skills and Innovation expects only 25% of them to do so.  So the supposed cut will actually initially increase the size of the deficit. Indeed, the government will need to borrow over £5bn more to provide the initial loans – even though like any good loan shark they’ll be borrowing at rates lower than the 4-5% they’ll be charging students. It is, as David Willets has acknowledged, essentially an accounting trick to enable the government to make sub-prime loans to students with no guaranteed income.  Experience in the US, which remains the government’s model of private provision, suggests that eventually the loans themselves will be privatized to make the system sustainable for the exchequer. 
  3. The Coalition insists that most universities will charge £6,000 but, as the independent Higher Education Policy Institute has demonstrated, to survive let alone succeed many will quickly reach for the £9,000 limit.  For the £6000 fee, double what most students currently pay, universities will actually receive less  (about £1300 for most degree programmes).  In any market, even in the artificially created one for higher education, it is unlikely that students will be prepared to pay more for less. While the privileged will remain able to speculate on their futures by investing in premier league degrees, the rest will be forced to pay for second class degrees. As English universities lust for more income to survive or compete globally, and the current fee structure of £6,000 represents a cut in their funding, it is only a matter of time before Vice Chancellors start lobbying government to remove the £9,000 upper limit. At this point it is likely that the government will turn to private loan companies and cheaper private universities with online provision to help fund an increasingly variegated system with new third class degrees that maintain a fig leaf of access while privilege prospers.
  4. While the Coalition has been at pains to make £6,000 not £9,000 the headline figure this is not the real cost of a university education, just the tuition cost for one year. At most campuses accommodation, subsistence and learning needs are around £8,000 and in London they are higher still. The real cost of a university education is therefore close to a total of £50,000. Very few people from low-income families, despite all the last minute additions to the current bill, will be able to countenance such an investment in their future.
  5. Not all graduates will benefit from speculating on a university education as a private investment by earning substantially higher earnings over their lifetimes – particularly those in the arts and mature part-time students.  And then there are those who drop out.  Again experience in the US suggests that as fees rise and students work other jobs to help offset their loans drop-out rates rise. There is no recognition that university graduates, let alone those who do not graduate, are a diverse group with different life and career trajectories.  Even though these students will only have to repay their loans if their incomes exceed £21,000 many will face a full thirty years of repayment that will surely also negatively impact their ability to raise mortgages and become home-owners.
  6. One of the biggest fallacies of the current debate is not just the assumption that only graduates benefit from their higher education but that conversely public investment should only be restricted to those areas of social life that are truly collective and universal in provision.  This is nonsense.  If higher education has become a private good because not all of the population benefit from it then we should follow this logic in to other areas – like unemployment benefit.  Can we really imagine or countenance a system in which unemployment benefit is considered a private good delivered only by way of loans that have to be paid back?
  7. We should have no time for the old and familiar argument that there is no alternative.  The graduate tax is a fairer tax on prospective earnings than the proposed system and has been dismissed because the Coalition, and too many universities, insists that there is no way of cooking the books to make it reduce current government expenditure. Yet there are other alternatives.  With 80% of the public supporting a rise in expenditure on higher education an argument for its funding through increased taxation is there to be made by any political party that truly believes in social mobility and public investment in the knowledge economies of the twenty first century.   Given that no such mainstream political party currently exists we could at the very least call for a continuation of the same mixed economy of public and private funding by increasing top-up fees in the hundreds rather than the thousands to offset a cut of 10-20% sustained in other sectors.
  8. And, finally, as this vote has been rushed through in the wake of considerable public protests and unease, we should not accept the logic of acting quickly.  There is no state of emergency here. The Browne Report did indeed deliberate at length but its brief was narrow and its proposals have failed to win the support of anyone but the majority of Vice Chancellors. The future of higher education, and the future of our democracy are too important to be vandalized by poorly conceived and badly argued legislation. Vandalism does not just happen on the streets.
  1. This article is published by James Vernon, and under a Creative Commons licence. You may republish it without needing further permission, with attribution for non-commercial purposes following these guidelines. These rules apply to one-off or infrequent use.

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