A market in universities: one import the UK could do without?

Why the US funding model will cause British institutions more harm than good.

It is no surprise that the new Secretary of State for Business has led the charge to reduce the numbers of people going to university. To the chagrin of many Liberal Democrats at the time, this is precisely what Vince Cable said in opposition.

The cut in additional student numbers will do little for the social mobility which is allegedly a linchpin of the coalition government's higher education agreement. Universities now have to manage a £1bn reduction in funding, with David Willetts implying that student support is a burden on the taxpayer. Are these good enough reasons to transport the US model for the funding of higher education to England, as David Blanchflower suggests ("The case for higher university fees")?

The answer is almost certainly no. Unlike their US counterparts, the UK universities which are arguing for higher fees do not want to become private institutions. Rather, they want to have their cake and eat it: taxpayer funding for teaching, research, fee loans and student support, with the university then given the right to charge additional fees either upfront or through additional fee loans financed by bonds and commercial providers.

It is no surprise that the universities which want to compete on price and quality on the back of state funding are the ones that have the most socially exclusive profiles. By "quality", they mean not standards, but quality of the "student experience", based on small campuses where students study away from home and full-time. This is very far removed from the experience of most of the UK's two million students, over 40 per cent of whom study part-time, many of whom have to work to pay their way, and some of whom live at home to save money.

A quasi-US-style system would be certain to deliver inequity for most of the UK's higher education students. Like US health care, it would have outcomes that would be neither as equitable nor as productive as the UK's current system. In particular, a market based on state funding with higher tuition fees backed by private finance will have the inevitable outcome of delivering less resource to the universities that contribute most to social mobility. This is not a policy that the left would advocate for schools. Why should it be an acceptable outcome for UK universities and students?

The Westminster government could easily create a fairer funding system. By introducing a small (1-2 per cent) real rate of interest on student loans, similar to that applied in countries such as Norway, Denmark and Sweden, and by extending the period when graduates in England repay a contribution to the costs of their higher education, the Exchequer would benefit by £1bn per year.

This would be enough to fund many more students, avoid the cuts in higher education imposed by the deficit hawks and even extend fee and maintenance loans to part-time students who at the moment still have to pay their fees upfront. Fairer funding for all is on the table if the government (and the opposition) want to pursue it.

Pam Tatlow is chief executive of the university think tank million+

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PMQs review: Jeremy Corbyn bids for the NHS to rescue Labour

Ahead of tomorrow's by-elections, Corbyn damned Theresa May for putting the service in a "state of emergency".

Whenever Labour leaders are in trouble, they seek political refuge in the NHS. Jeremy Corbyn, whose party faces potential defeat in tomorrow’s Copeland and Stoke by-elections, upheld this iron law today. In the case of the former, Labour has already warned that “babies will die” as a result of the downgrading of the hospital. It is crude but it may yet prove effective (it worked for No to AV, after all).

In the chamber, Corbyn assailed May for cutting the number of hospital beds, worsening waiting times, under-funding social care and abolishing nursing bursaries. The Labour leader rose to a crescendo, damning the Prime Minister for putting the service in a “a state of emergency”. But his scattergun attack was too unfocused to much trouble May.

The Prime Minister came armed with attack lines, brandishing a quote from former health secretary Andy Burnham on cutting hospital beds and reminding Corbyn that Labour promised to spend less on the NHS at the last election (only Nixon can go to China). May was able to boast that the Tories were providing “more money” for the service (this is not, of course, the same as “enough”). Just as Corbyn echoed his predecessors, so the Prime Minister sounded like David Cameron circa 2013, declaring that she would not “take lessons” from the party that presided over the Mid-Staffs scandal and warning that Labour would “borrow and bankrupt” the economy.

It was a dubious charge from the party that has racked up ever-higher debt but a reliably potent one. Labour, however, will be satisfied that May was more comfortable debating the economy or attacking the Brown government, than she was defending the state of the NHS. In Copeland and Stoke, where Corbyn’s party has held power since 1935 and 1950, Labour must hope that the electorate are as respectful of tradition as its leader.

George Eaton is political editor of the New Statesman.