Wasted opportunity

Nick Parrott says the government has missed its big chance to make higher education more equal

o, the tide has turned. The Higher Education Bill still has to negotiate the potentially tricky shoals of the House of Lords but with the strength of the Commons rebellion sapped the Government can be reasonably confident that its Bill will reach the statute book at least largely intact – and, crucially, with variable tuition fees as its centrepiece.

Andy yet now more than ever, it begs the question: what’s the point of variable fees?

After all, any measure that takes such a heavy political toll on Labour’s electoral prospects should, for any sensible political strategist have a correspondingly high importance in achieving the Government’s aims.

Yet the reasons for variable fees have been opaque throughout the debate. The White Paper emphasises the importance of funding Universities and students who benefit contributing.

One of the many circular arguments deployed by spokespeople of both the Government and their allies in the Higher Education sector is that more funding is essential. One wonders why, if the Universities are so vital to the UK economy and so desperately under-funded, they are not worth funding in a method less politically costly – from general taxation for example.

Of course, there is a perfectly valid case on the left for agreeing with the proposition that the middle classes who overwhelmingly benefit from Higher Education should contribute back. Many on the left would argue that they will do so anyway through income tax, and that education is a right, not a privilege.

Personally, I would accept that there is a good case for graduates to pay a specific contribution. A right, after all, is something that is available to all and even if the Government achieve their target of 50% participation that’s still 50% short of making it a right, not a privilege. A service available to less than half the population – the most advantaged half – seems to me to be a privilege and not a right.

Furthermore, Universities – and especially the self-styled Ivy League – are a classic mechanism for passing on class privilege from one generation to the next. I’m happy to tax graduates on that basis. This could be summarised as the socialist case for a graduate contribution.

Unfortunately, it doesn’t amount to any kind of case for the system devised by the Government, despite the progressive rhetoric hastily discovered by Tony Blair in the face of potential rebellion.

If the aim were to tax privilege in the pursuit of a more equal society then I would accept a Graduate Contribution Scheme similar to that the Government proposed. It would have huge advantages over the status quo, addressing debt aversion and being a thoroughly progressive tax.

The proposed system, will not, however, do that – potential students will see their contribution as a debt to be repaid because it is still called a fee, a specific fee for a specific course. Furthermore, a review that was supposed to design a simplified student support system has ended up relying on each institution to devise its own bursary scheme – and those with the most disadvantaged students will be those who can least afford to be generous.

Why have the Government been caught in this trap? Because if there is going to be a variable charge for a degree, that will take the form of a fee to be paid. The Graduate Contribution Scheme could have been a progressive tax where the amount repaid depends on graduate earnings – surely the best way of ensuring that those who benefit most contribute the most while removing the problem of debt aversion amongst the most disadvantaged potential students. Instead there will be a virtual marketplace where the Graduate Contribution Scheme is just a way of repaying a debt incurred to pay a fee for a service.

The Government discovered a new argument in time for the Third Reading of the Bill – variability was actually intended to allow fees to go down, not up. Universities could decide to discount fees for courses of particular economic (or other) value but which did not attract sufficient students.

Once again, this fails to convince. For a start, it seems to accept that potential students will, after all, decide to take courses based the cost, which is itself a big potential problem with the system. Secondly, the science courses to which this would mainly apply tend to be the most expensive to provide, which doesn’t bode well for Universities’ supposed inclination to charge less for them. Thirdly, if there are courses which are so important to the country, why leave it to the Universities to decide what they are? After all, they will inevitably be driven by the market considerations that the system introduces, not the national interest.

So, we are again left to ask, what is the point of variable fees? Why not a decent, progressive, graduate contribution?

Charles Clarke has proffered several linked explanations for his opposition to any kind of graduate tax. Firstly, it doesn’t recognise the “diversity” in the HE sector. Many of us might think that “diversity” is better known as “inequality”. We certainly recognise it (in the HE sector and elsewhere) but we want to reduce it, not increase it. I can see the unfairness that Clarke recognises in a student at Coventry paying the same fees as a student at Cambridge, given the likely differences in their class backgrounds and graduate earnings.

Unfortunately, variable fees are not a particularly good way of ensuring fairness, given that even the modern Universities are, by the Government’s own admission, likely to still charge the full fee for most of their courses. A properly designed graduate contribution scheme would, however, address this perfectly well because the eventual contribution would be related to graduate income and there could be exemptions for students from disadvantaged backgrounds in the same way there are with the Government’s scheme.

The other justifications put by Ministers were that fees would guarantee a ring fenced private income for individual Universities, students would know the cost of their course and be able to make financial judgements in advance and that they would have greater leverage over their institutions.

These assertions are in themselves questionable – the level of repayments will depend on all sorts of trends in graduate employment and earnings and it is hard to see how this will necessarily be easy to predict. And it is questionable that students will be able to accurately gauge the costs of their courses simply because they know the level of fees when they start.

Even assuming that these assumptions are correct, they amount to a poor case for anyone on the left. Ensuring a private, independent revenue stream for individual Universities should not be a priority for any Labour Government.

This will incentivise attracting the richest students, while a properly designed funding system would ensure that institutions were rewarded for widening access. A graduate contribution scheme based on earnings would make the eventual contribution difficult to predict, but it should be capped and the Government’s own system wouldn’t solve this problem. Whilst becoming consumers is likely to make students more demanding – not least over such matters as their exam results – one has only to look at school admissions to see that the top Universities will choose their students, not vice versa.

These arguments, do, however, give us more of an insight into the purpose behind variable fees. Those who cast their minds back might recall the original justification advanced by Blair– the need to fund ‘world class Universities’. They need not look much further to see where the idea originated – those very Universities, who do the most to maintain Britain’s class system.

It is a testament to the enduring power of the old, Oxbridge-educated, Establishment that they have managed to get their purposes to be advanced by a supposedly modernising Government. But it is also a worrying sign of the ideological vacuity in Government’s current thinking – unsure of their fundamental aims but desperate to appear “radical” and instinctively attracted to market mechanisms in doing so. Meanwhile a market would allow the “best” Universities to maintain their competitive advantage and gain a private source of income.

As it happens, by the time the Bill reaches the Statute Book the amendments inserted to satisfy Labour MPs will mean it is very far from what the original architects of variable fees intended. The system proposed by the Bill is a mess but it is better than the status quo. But this was a terrible wasted opportunity to reform Higher Education in the pursuit of social justice – and it should be a wake up call for the Labour Party that we need to rediscover our sense of direction and purpose.