Hey Student!

The cost to students of going to university has been a big political issue at least since tuition fees were increased to £9k a year by the coalition government. It was less hotly contested previously when fees were lower, it barely made a dent in the popularity of Blair’s government that it went back on its promise not to introduce fees and a pledge to abolish them didn’t sweep Michael Howard into Number 10 in 2005. But this year, abolition of tuition fees was one of the big policies which helped Jeremy Corbyn to attract large numbers of young supporters and activists in the General Election (even if I think the more electorally significant appeal was to the parents of children who would be going to university in the next few years). The popularity of this is a real phenomenon, albeit one based on some “aspirational”, or delusional, thinking, so I’d like to propose a more practical and immediately achievable alternative to address many of the underlying concerns.

Do we have a problem with tuition fees and student loans?

It is unsurprising that the idea of taking on at least £27k of debt for a three year degree, not to mention up to another £33k of debt if entitled to the highest level of maintenance loan to fund living expenses, will fill many with horror if they look at those numbers in isolation. In the context of making bold and clear promises, hitting out at those levels of debt will always be popular. That (as so often), the reality is more complicated, is easily lost. So it is easy to dismiss the fact that the introduction and subsequent increases in tuition fees have rather than reduced the numbers applying for and going to university, actually been accompanied by those numbers rising. Similarly, the proportion of applicants and students from the least well-off backgrounds has risen, in contrast with the fall seen in Scotland where the Scots Government abolished tuition fees for Scots and EU students (other than those from elsewhere in the UK). While nobody says that raising tuition fees causes more to want to study, however counterintuitive it might seem, it cannot be said definitively that it has deterred substantial numbers. As something approaching the 50% of young people who Blair, before being elected in 1997, said he wanted to experience higher education are now doing so, even if the costs do deter some, there is a question as to whether having much more than 50% of young people going to university is beneficial.

Yet, the issue remains. So at least politically, there has to be a consideration of whether the current system is the best one and if not, whether there are alternatives which would be an improvement. One of those might be simply to abolish tuition fees and to bring back maintenance grants at a cost of some £12 billion a year. But even that manifesto promise from Labour started to unravel sufficiently that shortly before the General Election they mooted the possibility of writing off all past student debt. I think that logically this did need to be done because merely abolishing fees for students starting their courses in 2018 would itself create a huge cliff edge of unfairness which would have hit all those who had by the accident of having been born a couple of years earlier, continued to have been liable for loans which were being portrayed as manifestly unfair. All those students who tirelessly campaigned for Jeremy Corbyn to become PM would on graduation discover that what they’d actually done was to hamper their own lives for years to come. Can you imagine being a fly on the wall as a manager, graduated in 2017 with £60k of debt, repayable at 9% of their income above £21k a year for the next 30 years and seeing their income tax going up, gets asked for a pay rise in 2022 by the debt-free graduate trainee they’re supervising? Can you imagine their face when that trainee gazumps them on buying a flat in 2024 after they’ve managed to save a deposit which the manager will need another couple of years to get? Of course the natural next step after abolition of student loans for the future would have to be to wipe out past debts if you didn’t want either to ignite intergenerational warfare or rely on pure altruism!

That possibility was described by the Shadow Chancellor in an interview on BBC1 with Andrew Marr as “an aspiration”, as the cost of doing so is estimated at £100 billion. Some Conservatives gleefully leapt upon this as a “gotcha” moment where they could use this to say “guys, they lied to you, they never really meant to do it, you were duped into supporting them!”. I’m not so sure. While an aspiration is not as good as a manifesto promise, and a manifesto promise itself can be conveniently watered down or indeed reneged upon if circumstances allow (as with the original introduction of fees), it is not nothing. Much of Labour’s appeal, even before Corbyn, but particularly since, comes from the feeling that they care. That they really “give a stuff about stuff” and will always be aiming to do nice things even if they can’t always deliver them. Rather than destroy the argument on student finance, McDonnell’s admission doubled down on it. Many will have seen it as Labour moving further than its manifesto promise of free tuition to a future, at some point, but one which Labour would be working towards because it was its aspiration, in which those burdened with past debts would also be forgiven them. I don’t think it entirely fanciful that some might even see that as a very good argument for getting them in as soon as possible so that they can start working towards that aspiration quickly. One of the blows from Cameron’s Conservatives in 2015 which hit was that Miliband’s Labour didn’t get aspiration. That Corbyn’s Labour in 2017 has aspirations which chime with so many is not a telling criticism of it!

No, the real criticism of this entire line of policy is not that it is aspirational but that it is delusional.

This is where the realities can and should be set out. Not to knock the underlying idea that many in society instinctively find the notion of students graduating with £60k of debt unattractive. But to look at the practicality of the aspiration as set out by Labour. The impact it would have on people.

At no point in the future is it conceivable that adding £100bn onto public spending to benefit those who have already graduated and started to acquire the benefits of a university degree anyway would be anywhere near a priority for a government. That’s more than the annual budget of the NHS. The idea that next year and every year thereafter it would be a good idea to spend £12bn on paying the fees for half the population to go to university and providing many of them with their living expenses should be seen as ludicrous. That’s the same as increasing disability benefits by more than 25%, housing benefits by 40% or quadrupling unemployment benefits. There would also be other aspects of education where such an increase in funding would benefit more disadvantaged children, particularly in Early Years. Although participation in higher education now stands at about 25% of those from the least advantaged backgrounds, students are still much more likely to come from better off families so making university free instead of increasing welfare benefits is not in any way progressive or fair. Even if the policy were to be enacted in addition to increasing welfare benefits, social care, school and early years education, etc, the point is that there would be more of a case for not doing it at all and putting that £12bn into those other areas. Being churlish I’d note here that Labour weren’t even proposing to do all those things – it was striking that they did not promise to increase welfare in their manifesto, at best it was another “aspiration”.

The other delusion is that abolishing tuition fees would be necessary to reflect the fact that having an educated population benefits us all. That is undeniably true and if the current system were such that students alone bore the cost of their degrees, there would be some merit in rebalancing things so that there the general public paid a part. However, the reality is that the entire student finance system in England and Wales has been designed with the assumption that a significant proportion, up to around a third, of students will not repay the entirety of their student loans by the end of the 30 year period after which the debt is written off. What this means is that a significant proportion of the amounts borrowed by students to pay for tuition and maintenance is actually paid for by general taxation. The system already accounts for the broader social benefit of an educated population by subsidising those students who don’t earn enough over the course of early to middle parts of their careers. And it does so by transferring the money immediately into the universities they attend, rather than slowly over the decades. Which is one of the reasons why Scots universities have the free places for Scottish students rationed. The Scots government pays about £7k a year to its universities per place. Of course those universities will be keen to expand provision to take English, Welsh and Northern Irish students who will attract fees of £9k a year. Indeed, the difference between those two fee levels is probably a good indicator of the additional public funding available from central government for universities on the basis of the expected repayment rates of loans.

Another point which this leads on to is that student loans are very odd types of loan (for detail on how the loans work see this link). The discussion tends to make it look as if student loans are like personal loans or mortgages. Obviously there will be horror at the idea that a 21 year old can be expected to start out in the adult world with £60k of something like credit card debt. But, student loans aren’t like that. It would in theory be possible to take out a personal loan or a mortgage which you didn’t have to make repayments for if your income dropped below £21k, but only at huge cost (it would be an insurance product something like PPI…). In practice, nobody would lend on the basis of having no idea whether an individual would ever earn enough to repay and without any particular concern if they earned too little to make repayments from time to time over 30 years. The amount repayable monthly is also independent of the amount actually borrowed. So a student doing a 3 year course who was not entitled to a maintenance loan could borrow £27k while one doing a 5 year course with a maintenance loan could borrow £100k and when they graduate, both will make identical repayments if they earn the same amount of money. There has been some disquiet at the applicable interest rate having been increased to 6%, but the effect of this is to reduce the proportion of high earning graduates who are able to repay quickly, it makes no difference at all to those lower earners who would never have repaid in full at the previous lower rate of interest.

The only difference comes in how long they carry on making those repayments. While they are called loans, they’re really much more like a graduate tax, right down to being deducted from gross pay in employees’ payslips. Maybe the biggest delusion of all is therefore that students are funded by loans.

I said earlier on that having aspirations is not to be criticised in itself. The other element to this is that I don’t think you can credibly criticise aspirations, or even the delusions I set out, without having an alternative which can address the problems more realistically and practically. One approach might be to say, actually, the current system does things just right, but however misguided or even delusional some of the criticisms of the current system might be, the reality is that many people find it bad and are unlikely to be persuaded otherwise. Not everyone who disagrees with a position does so purely out of ignorance which merely requires the facts to be set out, whereupon they’ll go “oh, no, I can see I was wrong”. So, maybe…

It would be better to abolish student loans and replace them with a graduate tax

Now, I’m a Conservative, so I’m not normally one to favour proposing new taxes, but hear me out here. I also don’t like “stealth taxes” so I think there’s a strong case for transparency. As what we have with the current system of higher education finance is in effect a 9% tax on the income above £21k of all graduates why not just replace the loans with a clear tax? Without making any other changes at all, this could in principle have the effect of abolishing tuition fees and funding grants on the same criteria as those currently in place for maintenance loans. The same amount of public funding from general taxation as is currently used to enable the Student Loans Company to write off debts after 30 years could be applied to ensure that universities continued to get the £9k of funding needed to provide their courses. It is even possible that current student loans could be written off and their repayments replaced by liability to the tax. Although that may raise some additional questions depending on how far back to take it – it could be seen by those who took out loans going back to the 1990s who have repaid them or nearly done so as unfair if applied to the entirety of the Student Loan Company book of debts so perhaps the sensible cut off would be for loans for courses starting the year the fees were raised to £9k.

The precise percentage at which the tax should be levied would need to be determined, as well as how long it should be applied, ie just for 30 years, or until State Pension Age is reached. The latter would allow for the percentage to be reduced, providing an immediate cash terms benefit to new graduates and would be administratively simpler. But overall, the aim would be for the tax to cover the costs of higher education as they stand without requiring cuts to other budgets or increases in other taxes.

Apart from being more transparent, a graduate tax of this sort would also remove, to the extent that it exists, the possibility that a young person might be put off applying to university by the idea of taking on debt. I would be quite surprised if many young people make career choices at school based on the level of taxation they are likely to incur in the future. Are there any 17 year olds who decide against applying to read Law with the aim of becoming a solicitor by the fact that if they practice in a big City firm they’ll be paying the 45p rate of tax in their 30s? Or who opt for nursing over medicine because they’re less likely to be hit by the 40p rate? I’d be surprised if anything more than a small minority of employed adults could even say what rate of National Insurance they pay let alone that they thought about the different rates applicable when they were still at school. Income taxes, of which the graduate tax would be one, are, for good or ill, something that people only really think about and worry about (if at all) once they apply to what they are actually earning at the time.

This also leads on to another benefit. As a tax, the level of the tax could be varied based on the actual needs of universities, students and society. Those paying the tax would have a voice in this, so there could be an informed political debate over time as to what and how much should be paid. If there were a majority who thought grants and bursaries should be increased (or in the case of nursing, reintroduced), there would be a clear mechanism for doing so and they’d need to win support for increasing the graduate tax. If on the other hand, there were a majority who thought that eg certain subjects were not suitably valuable to society to merit being funded through their taxes or that it would be a good idea if certain post-graduate courses should also attract funding, that too could be passed. Debate over higher education would become more informed by what the public were willing to bear in reality rather than in abstract (“of course it would be great if everyone could spend 3 years doing whatever they fancy for free, how dare you try to make learning about money, consider the lilies in the field?”). But the pre-fees situation of “why should the bin man pay taxes to pay for the rich kid to swan around studying Art History?” would no longer have any force because the vast bulk of the costs would be borne by high earning graduates and it would be much clearer that the bin man’s contribution in taxes would be going to the general benefit of having an educated population which supplied good quality doctors and teachers (etc).

Now with Brexit, there is the ability to design a higher education funding system which is not based upon an expectation that it will have to be made available on identical terms to students from 27 other EU states which meant that loans were enforceable against foreign students who left the UK after graduating whereas a tax would not have been. Perhaps the time has come for a graduate tax. Doing this while maintaining the funding going to universities, providing living expense support to students from poorer backgrounds, possibly reducing the amounts actually deducted from the pay packets of graduates and extending the benefits of all this to past graduates and current students without requiring cuts to public spending or increases in general taxation strikes me as not just an aspiration, but something which could be done in reality and soon. 

 

 

 

 

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Too Shy Shy

I didn’t write much about the General Election campaign beyond a comment on Labour’s Zero Hours Contracts proposals. I’d felt for a long while that somehow, despite Ed Miliband’s oddness he was probably going to hobble somehow into Number 10 and that if he did, he’d probably be weak enough not to do anything too radical or harmful – most of his policy announcements or statements of general philosophy were pretty vapid and consisted of criticising the effects of market based policies but only replacing them with a temporary fix to hit a particular failing rather than to strike at the cause of that failing (eg by fixing energy prices- hastily amended to read retrospectively as capping them when in fact they fell regardless of intervention and those who’d fixed their rates ended up paying more than those who stayed on variable tariffs).

Since the surprise result last week of a clear Tory majority there has been a lot of speculation about what went wrong. Why did the polls stay level pegging even up to the eve of the election? Innumerable Labour MPs and pundits suddenly announcing that they knew their campaign and leader were duds all along (which struck me as deeply unfair – if they thought that, why not do something about it rather than let poor Ed, an obviously decent man, carry the can before circling to fight over the remains?).

The most interesting line has been about the phenomenon of the “Shy Tory” to explain why there were many more Conservative votes in fact than would have been predicted by the opinion polls. The first General Election I could vote in was in 1992 where the Shy Tory first came into view. I’d been a rather lackadaisical student Tory activist and my recollection is that nobody even in the student Conservative Association thought Major had much chance (perhaps skewed by fruitlessly trudging the streets of safely Labour Oxford East, perhaps because the Association’s membership included more right wing luminaries like Mark Reckless) so the overall result was a surprise.

The day before the election, on my train home from London I had the chance to read an interesting (if very long!) statistical analysis of opinion polling for the last 50 years of elections compared with the actual votes. I recommend reading it if you have time. The striking conclusion that it came to was that in 10 of the previous 12 elections, the opinions had understated the Tory vote share (now 11 of the past 13). It doesn’t go into the psychological or political reasons why this might be the case in any detail but rather looks at the methodology of polling (which was changed after 1992 because of how wrong it had got that result). Most strikingly of all, on its final page it suggests a Tory lead of 6 points for 2015, which is pretty much spot on. After reading it I was tempted, in the face of everything else coming out of the media, to put a bet on a Tory majority (which would have stymied it!).

From a personal perspective I can well see that there may be a Shy Tory effect. Those who read this blog regularly or know me well in real life (and in some cases describe it/me as rabidly right wing- though I’d prefer to think I’m at least reasonably measured and rational about it!) will not perhaps see me as particularly shy. However, I tend not to talk politics much with people I don’t already know well. At least not on a party basis. Curiously, I’ve found that often if you just talk about particular things that are happening or could be done, the discussion is more interesting and friendly. Until the point at which it transpires that what you’ve just said is Tory policy. Whereupon it gets taken down for being a sham or a front for some corporate conspiracy theory or a misdirection away from something else. Which makes further discussion redundant.

I was rather mortified last week when Mrs B told me she’d told the mum of one of OMB’s school friends, who I get on with well and who is also a local Labour councillor, that I’m a Tory member (fortunately she didn’t seem to hold it against me!). Even good friends of mine will accept it only generally in the context of it being an eccentricity that years of friendship makes just about tolerable. Memorably after the 2010 election one friend said she’d assumed I was a LibDem as it was as right wing as would fit with her idea of people she’d spend time with. So, I didn’t join with the rest of my facebook timeline in bombarding everyone with political messages (largely Labour, some Green) ahead of the election or indeed gloating about the result afterwards. It just isn’t worth the bother.

I think the phenomenon of Shy Tories will continue to exist until either there is an acceptance that not everything (or even most things) which might be proposed by the Tories are by definition evil or uncaring, or when many of those things are accepted and proposed by others so that you can support them without having to mention or be one of the Tories (the Blair effect). The reality is possibly that at least some Tories aren’t so much shy as just more introverted than those who want to shout their moral crusades on marches and placards, sound off on social media campaigns or to dominate a dinner party or pub night by chivvying everyone up to agree with them. We can find the campaigns run by The Sun and the Daily Mail to be cringeworthy without having to support those they are aimed against or be drawn into defending them and their proprietors.

No answers, only caricatures on HRA and EU

I have no interest in dredging through the judgments in the case infelicitously referred to by the Home Secretary in her Conference speech and the media’s reporting of them; if you’re interested, there’s a good account here. The story demonstrates something else which I think is more important. That there are at least two serious issues where the Conservative part of the coalition government is happy to wade in but without offering an actual answer. Human Rights is one of these and the other is membership of the EU. What these two issues have in common is that they are major areas in which there is a conflict between a system with an unwritten constitution where Parliament is sovereign and systems where the sovereignty of Parliament is subject to the jurisdiction of Courts and judges.

The Human Rights Act and a British Bill of Rights

On Human Rights, the “catflap” masked the real issues. The Conservatives campaigned in the last General Election on the basis of repealing the Human Rights Act (HRA) and replacing it with a British Bill of Rights. Now, it is possible that there are no genuine criticisms of the HRA so this is a bad policy. However, the debate on the issue on the BBC’s Question Time on 6 October 2011 showed that most of the people on the panel and in the audience in Salford had reservations about the scope and content of human rights and how they should best be treated in English Law. Much of this debate was, admittedly, rather ill-informed. That does not mean that there should not or could not be a debate. The problem is that I suspect the government does not really know what would be in a British Bill of Rights or how it would look. It is more politically expedient to run a campaign without any specific end-point which allows for there to be someone or something to blame for the “mad” stories that come out in the tabloid press, like the one about Maya the cat and whether owning her meant it would be a breach of the HRA to send a Bolivian student who had outstayed his visa back to Bolivia. It is a bit 1984 – a shadowy enemy of reason is built up and made to be the target of a regular two minute hate.

It is quite possible to take the view of human rights as being nonsense upon stilts without being a barbarian. It is also perfectly possible to think the HRA is a bad piece of legislation without denying the importance of human rights and their protection in the UK. Perhaps it was unnecessary to make enforcement of the provisions of the European Convention on Human Rights (ECHR) possible in the courts of the UK – is the UK really a more civilised place with a better record on human rights now than it was prior to the HRA? Back in those dark days the UK was still a signatory of the ECHR and its provisions could still be applied, albeit in a more laborious and costly way.

At least from the press coverage (which of course is very partial and not particularly well informed) it would seem that the sorts of legislative acts that have been reviewed most often under the HRA are recent measures which ought, if the HRA had a normative effect (ie it altered the approach of the State to take proper account of human rights issues), to have been considered when passing the measures into law or policy. Older legislation which was passed without the direct need to consider the application of the HRA somehow seems to be less often challenged. Although, as an aside, I remember from my time in the DTI that the ECHR was something that was considered when putting together legislative proposals well before the HRA.

So, if discussion about the madness of the HRA is to happen, it needs to be on the back of some concrete proposals about precisely what is wrong with it as legislation and what needs to be done to address that. Not silly and factually misleading anecdotes from the Daily Mail. My suspicion is that the sorts of change that would ultimately be proposed are going to be technical and not very easily communicated or understood by ordinary people. Silly soundbites are more effective ways of doing nothing very much.

Membership of the EU

Membership of the EU is another similar topic. There are good arguments on both sides. At the same time there is at least a significant minority who are opposed, whether for good or bad reasons to continuing membership. Yet the Conservative leadership of the government tries to sit on the fence. Partly this is political and practical – being too overtly in favour of withdrawal would make remaining in coalition with the europhile LibDems rather difficult. The problem here is that there is no real consensus on what those on the right would do if they were to be granted their wishes – that is, not only to have a referendum on whether to leave the EU but to win it. There’s no coherent plan or dream about what we could do if only we weren’t part of the EU.

So, there’s unlikely to be any real clamour for a referendum on the issue from anyone who might actually deliver one. None of the three main parties has an agenda that it is itching to put in place if only it weren’t for that pesky EU (although Labour could most easily come up with one but shows no signs of doing so). As an issue it is barely of more interest to the general public than the tedious AV referendum all the time that there is no-one holding out a credible plan for how life would be improved in practice were we to cease to be members. A sign of how close this parallel is can be seen in the number of “anti-EU” campaigners who advocate proposing to join EFTA (or more accurately the EEA) as being a way of getting the free trade area that “we” (or rather, a generation of people who are almost entirely over 60 today) voted for. Quite how they think that joining Club Liechtenstein will enthuse the masses escapes me.

The constitutional conflict

In both instances the real problem is that conservatives ultimately believe that the British “way” is a better one. That we have survived and prospered for hundreds of years on the basis of an unwritten constitution where politicians and Parliament have been sovereign is the basis for this belief. There’s a recognition that both the HRA and membership of the EU import an alien political and constitutional culture by eroding that notion of Parliamentary sovereignty in its strongest sense. That is, the sense in which what Parliament has decreed, on the basis of its democratic legitimacy, is not to be subject to undemocratic review by either domestic or foreign Courts or officials. Of course, there is still a weaker form of Parliamentary sovereignty in that it is not disputed that Parliament could repeal the HRA or determine to withdraw from the jurisdiction of the EU institutions.

The exercise of this weaker form of sovereignty is what is sought by UKIP and those who do not want the HRA or the ECHR to apply so as to bring back the stronger form of sovereignty. The government, perhaps driven by pragmatism, doesn’t want to be so very assertive but rather to try to find a way of mitigating the weakness of the sovereignty that it has so that it does not have effects which are so offensive to its broader belief that it should be in charge of more things.

Politicians, if you want to do something, tell us exactly what and why. If you believe that it is fine in principle for the UK’s democratic institutions to continue to delegate and cede their sovereignty to the Courts and EU institutions then say so. If you believe that we have made a mistake in outsourcing these issues then say so. If you believe that in principle these changes ought to be made but that you have nothing concrete or attractive to put in their place when exercising the sovereignty that would be thereby returned, we need to know so that we can choose someone who has a better idea about what they would do. Make your choice openly. Then go and do it. Don’t insult everyone’s intelligence by sounding as if you’re interested in an issue, bang on about it and then do nothing.