Financing Universities - October 2010

Vince Cable was given a hard time at the despatch box when he responded on behalf of the Government  broadly accepting the thrust of Lord Browne’s report which recommended higher tuition fees for universities.  The cause of his embarrassment was the fact that he had signed a pledge during the election campaign rejecting any such increase.  He explained his u-turn as a response to the truly awful financial position that the Government inherited.

I am in no position to gloat at Vince’s discomfort for I have travelled the same road. I enjoyed free university education with maintenance grants to cover living costs. It is perfectly natural to want to pass on the advantages that we had, to our children and future generations. So I voted against the last Government when it introduced tuition fees and withdrew maintenance grants from the vast majority of students.  I sent eighteenth birthday cards to new voters and I was in the habit of enclosing a flyer promising to abolish tuition fees when we returned to power.

It was David Cameron who changed the policy as soon as he became Leader of the Opposition six years ago. He recognised that the great expansion of opportunity, with so many more young people attending university, could not be financed by the already overburdened taxpayer. The new economic realities make this even more certain.

So how do we square the circle? Our universities –if they are to remain world class centres of excellence-need more cash, but the taxpayer hasn’t got any.  The alternatives are simple: either the fees must increase or we have to introduce a graduate tax on all those who benefit from university education. The reasons that the Government has rejected a graduate tax is because there will be no way of enforcing it on graduates who move overseas –as there will be every incentive for them to do. Second, there is a fundamental unfairness with a tax because many will end up paying more than the actual cost of their degree.

 A university education is part investment –graduates earn roughly £100,000 more than non graduates in a working lifetime, and it is also, at least in part, a consumer good that we want our young people to thoroughly enjoy. The new regime that the Government must now design has to produce a loan repayment structure for the higher fees which, far from putting potential students off, will empower them as consumers with so many more options and choices.