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. 





Things Can Only Get Bitter

Those few who regularly read my blogs will know I’m not a Labour supporter. So some will be surprised that I spent my Saturday evening at Momentum’s Leeds rally in support of Jeremy Corbyn’s re-election as Labour leader. However, given the clear mismatch between his incredible ability to motivate massive numbers of people to join Labour and both the 16% poll lead the Conservatives have over Labour and the huge number of Labour MPs who oppose him, I was interested to witness at first hand what is going on. I also wanted to see, without the often complained of bias of the mainstream media lens intermediating, what the man who should be being considered as our next Prime Minister if the Opposition is at all effective, is actually like and what he is proposing.

I want in this blog to be as fair as possible to him and his supporters to try and understand things from their perspective – of course there will be (and were) things about which I’ll differ strongly from them. I can’t guarantee I’ll succeed. A surprise perhaps is that there were a lot of things where I didn’t until it came to the proposed solution or the repeated claim that Corbyn’s Labour were the only ones to care about an issue. I think it is a mistake to believe that. While it makes it easier to paint everyone else as an enemy it makes it harder to persuade them you have a better way because it involves thinking they don’t and can’t care and so don’t need to be persuaded. It irks me to be caricatured as wanting to destroy the NHS and education (etc etc etc) when I and everyone I’ve ever met regardless of political allegiance wants no such thing. I accept I’m not brilliant at it at times but at least I can see that to win you need to win round those who don’t already agree with you rather than to call them evil or idiots who’ve been tricked (by dastardly media moguls or whoever) into supporting evil. This makes it too easy for the content of the message to be, as unfortunately it often was, filled with straw men and non-sequiturs.

One thing which is undeniable is that Jeremy Corbyn is incredibly popular with his supporters. The photos I’ve taken don’t quite do justice to the long queue to get in or the numbers in the meeting hall, although as it wasn’t completely full there was a little bit of stage management in keeping a crowd claimed to be a thousand standing outside to be separately addressed by Corbyn and Richard Burgon (Shadow Justice Secretary and Leeds East MP). Other noticeable things in the crowd were how many people seemed to know each other and its lack of diversity. While two of the six on the platform were from minority ethnic backgrounds you’d have struggled to find more than maybe a couple of dozen including me in the audience of perhaps 2,000 if the organisers’ claims are reliable. In a city the size of Leeds, particularly one with large immigrant communities in areas returning massive Labour majorities it was a surprise. There were many more visibly disabled people than members of visible (or audible, at least on the basis of the people I was around or spoke to) ethnic minorities.

As I wasn’t early enough to get a seat I apologise in advance for not having a note of the half of the panel who were not MPs and so I hadn’t heard of them before. Unfortunately that half was also the half which were women- a point made a couple of times by the speakers as a sign of how Labour promoted women, apparently oblivious to the UK having its second female Tory PM or that Burgon and Corbyn weren’t even in the room while the three women speakers gave their speeches (the first a quiet and shy former sabbatical officer for Leeds Beckett Student Union, the second a councillor from Islington who had been helped to secure asylum as a teenager fleeing DR Congo by Corbyn, the third a councillor from Calderdale who had brought a group of supporters along who intermittently started up football style chants). Much longer, louder and shoutier speeches were given by the men. First, Imran Hussein MP (Bradford East), then Burgon and finally Corbyn himself.

There was a curiously “retro” feel to the main themes and policy areas discussed. Unsurprisingly, the NHS and eulogies to 1945 took up a lot of time, with the main thrust being to give it a lot more money and to remove all private interests from it. There was a reference to stopping exploitation by rapacious drugs companies as well as a plea to have the NHS not reject drugs for being too expensive. Corbyn also talked of the need to invest more in mental health and to remove the stigma it carried, apparently oblivious to the “joke” by Ken Livingston about a Labour MP being mentally ill for his criticism of Corbyn. To rapturous applause, Corbyn characterised what he was fighting against as efforts by the Tories to drive so many people into using private medicine as to leave the NHS as just the provider of last resort for those who could not afford to do so. It isn’t a characterisation which seems grounded in reality to me. Were there really a Tory conspiracy to destroy the NHS it would have been dismantled years ago as we’ve had rather a lot of years of Conservative government since 1945.

Apart from the NHS, the biggest cheers came in parts of speeches covering the Miners’ Strike (plus obligatory booing of the name, Thatcher, out of office 26 years now) and opposition to the Iraq War. There seemed to be a genuine belief that there had been a conspiracy by Blairites to try and ensure that Corbyn was not Labour leader when the Chilcot Report was published and to stop him from issuing an apology on behalf of Labour for the war. It seems to be the basis for a slightly logically shaky thesis that “Jeremy was right about Iraq so must now be right about everything, people just haven’t realised it yet”. That point could equally be used to argue for the LibDems who as a Party voted against the Iraq War but who not many people now would say were right about everything even if prior to the 2010 General Election many said “I agree with Nick”. Other cheers were raised for Tony Benn (his son, Hilary being now an unperson not even mentioned, though I hope consulted by the organisers given that the rally was being held in his constituency) and Dennis Skinner.

Boos were mainly for Thatcher and, slightly curiously, Polly Toynbee. Only derision for Corbyn’s challenger, Owen Smith, and for the 172 Labour MPs who’d voted they had no confidence in Corbyn. Another narrative here across a number of the speakers was of the People vs Politicians. I always find this mildly ironic when delivered by professional politicians but apparently Burgon didn’t have any problem with ridiculing “them” with their £75k salaries while himself being an MP and being also one of them. It made a bit more sense in the image used by the Islington councillor from Congo of the country she came from being like a hand, with the little finger ordinary people, ring finger the community, middle finger professionals, index finger business and politicians being the thumb, furthest away from and different to the fingers. I’m not sure it describes the UK so well, at least not when spoken by politicians.

The other two major policy areas orated on were housing – solution, build lots of council houses – and employment law. Banning Zero Hour Contracts , abolishing fees for employment tribunals (a good idea but unclear why free access to employment tribunals so much more important than say increasing criminal and civil legal aid), abolishing Conservative legislation on Trade Unions and extending employment law protections to the self employed (this one I find bizarre – who are the self-employed going to take action against for being exploited, themselves, their customers?). Curiously Corbyn seemed to think someone had at some point made Sir Philip Green a government Minister.

There were also mentions for nationalisation of railways and using public ownership of the banks to direct their activities. Nationalisation generally seemed to be not just about ownership but about political control. In that context, the cheer an audience member got for shouting “nationalise the media” after Corbyn complained about how the media was biased against Labour and should have a duty not just to report what it said and did but to say what Labour was trying to achieve, was worrying. For me, that is asking to give the next Labour government the power to direct the media to report political intentions and aspirations rather than just what it actually does. Yet somehow I’m sceptical that such a government would support the media having a duty to report the intentions of its opposition.

Relatively little was said on the economy more generally other than to say that we had very high unemployment, which got a cheer despite being somewhat contestable, and that John McDonnell (big cheer) was very different to Osborne and Hammond. The EU was not mentioned at all, the nearest thing being a flyer from the Socialist Equality Party about it having advocated abstention from the EU Referendum (which perhaps is what Corbyn really did by having not campaigned with either Cameron or Labour In). It seemed something of an omission given that the practicalities of Brexit, or of resisting Brexit, are likely to be major activities for the government and opposition for some years and ought, in my opinion at least, to be ones which the major Parties take an active role.


The nearest Corbyn could come to trying to pitch to anyone who didn’t loudly self-identify as working class was to say that he’d take action to improve their lives by making it so that they didn’t have to see so many people living on the streets. Stopping homelessness is certainly something everyone would like to achieve but it felt a bit odd that that was all he could think of to appeal outside the room.

It was an interesting evening and I think Corbyn will easily be re-elected as leader by Labour’s members but I saw no inclination among either him or his supporters to broaden that conversation out to persuade those who did not already believe everything they believed. Corbyn’s generally weak performances in Prime Minister’s Questions are symptomatic of this unwillingness or inability to engage with opposing views. The football chants and jeers in the rally were proof enough for me that apparent distaste for the yah-boo nature of Parliament and desire for a kinder, gentler politics is a sham. I think he’ll let down a lot of people who seemed nice and decent. Or at least as nice and decent as people who need their leader to tell them not to send abusive messages to people who disagree with them and who cheer when told they don’t look like they’re the ones lobbing bricks at people. Had I mentioned I thought Hilary Benn was a decent guy I think the auditorium would have turned into a scene from a zombie movie as all the undead point at the fresh living human.

Beware of what you wish for

Jeremy Corbyn has managed to get onto the final ballot to become the next leader of the Labour Party and succeed Ed Miliband. Perhaps fittingly for an MP first elected in 1983, unlike others in that generation like Tony Blair and Gordon Brown, he looks like he believed every word of Labour’s 1983 manifesto (“the longest suicide note in history”) and still does. Unsurprisingly championed by the likes of Owen Jones, he’s a supporter of:

Despite twitter being much more vocally left than right wing even on my feed (!), interestingly there have been a lot of right wing tweeters gleefully suggesting taking up Labour’s offer of affiliating for £3 to vote for him as being a sure-fire way of killing off Labour’s chances in 2020. After all, in 2010, the total number of Labour members and affiliates voting was less than 300,000 (and many of those will have had more than one vote by being both a member and an affiliate), so it would only take perhaps 30-40,000 carpet-bagger anti-Labour affiliates to join and be able to get him to win. If you’re not planning on standing as a councillor, MEP or MP, perhaps that would even be worth risking expulsion if you’re a Tory member!

Or would it?

While Corbyn looks like a stereo-typical Bennite far left candidate of the sort that must surely be unelectable, things aren’t necessarily so straightforward. There are a few things today which mean that it isn’t certain that a revival of Tony Benn’s Alternative Economic Strategy of 75-76 would be rejected so clearly as it was back then. Writers like Owen Jones have made a popular career out of reviving much of it for the generations who, like him, weren’t even born when it was a live issue. Lots of people this year found Labour not properly left wing enough and preferred to vote for the Greens or in Scotland, the SNP. The protectionist core of that line would also be likely to appeal to many who supported UKIP. It is also noticeable that the front-running three candidates, Andy Burnham, Yvette Cooper and Liz Kendall, are all pretty uninspiring, either being in Burnham and Cooper’s cases, cabinet ministers from the Brown years or a robotic Blairite like Kendall. In trying to learn the lessons of defeat in 2015 each has awkwardly tried to use the language of aspiration but ineptly like someone speaking in a foreign language and hilariously missing the nuances that would make them sound genuine.

I wrote a couple of years ago that Miliband could, consistently with the policy, ambition and philosophy he had set out have moved towards favouring EU exit and that had he done so, he would have given himself more room to expand on his policies as well as define himself in a cause which would have hurt his Conservative opponents (even if a 200 seat majority might have been over-optimistic).  It wasn’t really a serious suggestion as it would have been a very big move away from the consensus in Labour since Kinnock had started the hard job of making them electable again after 1983, particularly for a politician who had only ever seen those times. However, Corbyn doesn’t have to worry about this. He could, as a long term left wing rebel within Labour easily position himself on the EU back on the platform he first won his seat on. With a referendum on EU membership in a couple of years, he could gain a decisive victory against a Cameron led “In” campaign. Regardless of the policies (and interestingly there was an article in the New Statesman last week reminding readers that the strongest anti-EU arguments were left wing ones), all those Tory rebels and UKIP supporters who believe in leaving the EU on the grounds of protecting or regaining national sovereignty would have a dilemma if Labour campaigned for exit. And only Corbyn of the four hopefuls could do so without it being seen as purely partisan.

If this happened and there were to be a referendum vote in favour of exit, it would be very likely to bring down the present government. A large slice of the Tory party might be encouraged by it to defect to UKIP. There would also be little point in those UKIP MPs and supporters campaigning against Labour in any ensuing General Election because they’d be united in keeping out parties who supported staying in the EU. Which might make Corbyn rather more likely to become PM than he might look today.

So, if you’re a Tory thinking of joining Labour to support Corbyn so that the policies you like can continue through to 2025 and beyond, beware of what you wish for. A bit of Schadenfreude at Labour’s pickle today could lead to the stomach ache of a government to make Tony Benn’s ghost smile*.

* Although it is also worth mentioning that it is possible that Corbyn could do all this and fail through being seen as proposing so much rubbish and with so little likelihood of having the competence to see it through that not only does he discredit his broad far left policies but also the whole idea of leaving the EU as being in any way desirable- the question is, do you feel lucky?