Students from less advantaged backgrounds are going to university in greater numbers than ever before.
Our Universities are thriving and are right up at the top of the world rankings. Their alliances with business and with the technological advances of the third industrial revolution are vital to our economic prosperity as a nation. In all this the income from tuition fees has had a transformative effect. Without that fee income I just do not believe that government would make good the lost revenue, with all the other pressing demands on the public finances.
Important scientific research and innovation would be less well funded, and the opportunities for students to go to university would diminish.
Scotland is an object lesson: Scottish students pay no tuition fees. As a consequence universities like St Andrews limit the number of Scottish students to a mere 20% of total, and in their own country, but you can hardly blame the universities for preferring students that pay the fees.
When we were devising the current system of student finance back in 2010. We sought to gain the advantages of a graduate tax with without the disadvantages.
Our system is progressive: wealthier graduates pay more; the income threshold at which you start to repay will shortly be raised from £21,000 to £25,000. Also, any outstanding balance is written-off after 30 years. This writing-off of significant balances was a deliberately designed feature of the system, in order to reduce the costs paid by less well-off graduates.
The disadvantage of a graduate tax is that many graduates that achieve high levels of income would end up paying more than the cost of their degrees, and this is avoided under our arrangements.
I believe that I would have no difficulty persuading a student about to begin an engineering degree at –say, Imperial College London, that if it ended up costing him £50,000, he’d be getting a bargain and should have no doubt that it would result in higher levels of income, rewarding him for the investment that he had made.
I know that I could not make the same case for all courses at all institutions: many students are not getting the same value for money, but they are all paying the same amount.
The disappointing part of our reform was that it was supposed to create a demand-led market in higher education, but it hasn’t. Amongst other innovations we expected shorter degree courses to be offered to students who wanted them. We expected universities to charge different fees depending both on reputation and what was actually on offer.
Unfortunately, the imposition of a maximum fee of £9,000 per year has had the perverse effect of almost all universities charging exactly the same, and without the incentive to compete and innovate.
The Government, I believe, has just made exactly the same mistake with its proposal for a maximum charge for electricity. I fear that all the electricity companies will end up charging the maximum just in the way that universities have.
It is competition that drives prices down and innovation up, not government controls. The job of government is to promote competition by ending restrictive practices. Trying to fix prices has rarely, if ever, worked.