Is the tide turning on tuition fees?

22 Jul 2017

Ever since Tony Blair’s government introduced tuition fees nineteen years ago, the idea that a university education should cost something has been a staple of government policy. Which is why it makes it all the more interesting when the first secretary of state Damian Green, one of the PM’s closest confidants, and the Deputy Prime Minister in all but name, says we should have a “national debate” on tuition fees.


Aides to Mr Green, and the Universities Minister Jo Johnson, were quick to point out that this was not a suggestion of a rethink on government policy, but merely that it should explain that it’s either tuition fees or higher taxes. But over the last few weeks, culminating in Shadow Education Secretary Angela Rayner being granted an emergency debate in Parliament this Wednesday on the subject, the tide seems to be turning towards the possible abolition of tuition fees. And with the Lady who is for U-turning the embattled resident of Number 10, could this follow the ‘dementia tax’, the public sector pay cap, and possibly Brexit itself into the out tray?


It’s worth reminding ourselves how it is we got to this position that would have seemed unthinkable even a year ago. First, the undeniable success of Jeremy Corbyn’s wooing of the student vote in 2017 put the issue of student debt and university fees front and centre in the election that was supposed to be about Brexit. I’ve been on record that it’s patronising rubbish to suggest that the policy of abolishing fees was the sole reason why Labour attracted young voters in huge numbers, but there’s no doubting that being greeted on your 21st birthday with £50,000 worth of student debt is a big issue to many people my age. And perhaps a massive student turnout that helped evict the Ashford MP’s neighbour Sir Julian Brazier from his nearby Canterbury seat made him realise that the Tory Party is losing a demographic battle.


Then came a landmark report from the respected think tank the IFS two weeks ago, which found that most will now finish university with an average debt of £50,000, which 77 per cent of graduates will never pay off. This prompted an interesting piece from former Number 10 Policy Unit chief Lord Adonis, the architect of the £3,000 ‘top-up’ fees introduced by Labour in 2004. His argument can essentially be summed up by this quote; “How did we get from the idea of a reasonable contribution to the cost of university tuition, to today’s Frankenstein’s monster of £50,000-plus debts for graduates on modest salaries who can’t remotely afford to pay back these sums while starting families?”


The problem therefore with these spiralling fees, which seem set to be raised even further, is twofold. Firstly of course the level of debt that graduating students are burdened with, which is also supplemented by interest rates of up to 6.1%. The fact that previous Chancellor George Osborne was able to, in effect, retrospectively change the terms and conditions on those tuition fee loans by upping their interest rates to a variable rate above inflation after students had already taken them out is entirely reprehensible.


Furthermore, that level of debt, and the fact that according to the IFS two-thirds will never pay that back, creates something of a black hole in the government finances, seeing as that money that is paid out via the Student Loans Company is never coming back. Intriguingly, Adonis raised the point that the intention was that, while capped at £3,000, fees “would vary between £1,000 and £3,000, depending on the cost and benefit of the individual course.” In practice of course, we know what happened. Fees were set across the board at the maximum £3,000, which then became £9,000 under the Coalition government.


The counter-argument, of sorts, was raised by personal financial guru Martin Lewis on 5 Live last Monday. The point was that, while yes you are going to graduate with a lot of debt, if you are going to have a system whereby university education does cost, the current system we have is probably the best you can aim for, in terms of the fact you have to earn £21,000 before you start paying anything back, and how it is wiped after 30 years.


Therefore, this means that this is less a personal finance based argument and more an ideological one. And if the last few weeks are any indication, we seem to be headed for collision course between those who believe in tuition fees, and an increasing number who want them abolished. Whether that leads to a system that Adonis originally envisioned, where degrees are priced according to their relative merits, their resource use and hours of teaching, or they are abolished all together, it seems that since June 8th the tide does appear to be turning against tuition fees.

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