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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What Jeremy Corbyn gets right about the single market

Technically, you can be outside the EU but inside the single market. Philosophically, you're still in the EU. 

I’ve been trying to work out what bothers me about the response to Jeremy Corbyn’s interview on the Andrew Marr programme.

What bothers me about Corbyn’s interview is obvious: the use of the phrase “wholesale importation” to describe people coming from Eastern Europe to the United Kingdom makes them sound like boxes of sugar rather than people. Adding to that, by suggesting that this “importation” had “destroy[ed] conditions”, rather than laying the blame on Britain’s under-enforced and under-regulated labour market, his words were more appropriate to a politician who believes that immigrants are objects to be scapegoated, not people to be served. (Though perhaps that is appropriate for the leader of the Labour Party if recent history is any guide.)

But I’m bothered, too, by the reaction to another part of his interview, in which the Labour leader said that Britain must leave the single market as it leaves the European Union. The response to this, which is technically correct, has been to attack Corbyn as Liechtenstein, Switzerland, Norway and Iceland are members of the single market but not the European Union.

In my view, leaving the single market will make Britain poorer in the short and long term, will immediately render much of Labour’s 2017 manifesto moot and will, in the long run, be a far bigger victory for right-wing politics than any mere election. Corbyn’s view, that the benefits of freeing a British government from the rules of the single market will outweigh the costs, doesn’t seem very likely to me. So why do I feel so uneasy about the claim that you can be a member of the single market and not the European Union?

I think it’s because the difficult truth is that these countries are, de facto, in the European Union in any meaningful sense. By any estimation, the three pillars of Britain’s “Out” vote were, firstly, control over Britain’s borders, aka the end of the free movement of people, secondly, more money for the public realm aka £350m a week for the NHS, and thirdly control over Britain’s own laws. It’s hard to see how, if the United Kingdom continues to be subject to the free movement of people, continues to pay large sums towards the European Union, and continues to have its laws set elsewhere, we have “honoured the referendum result”.

None of which changes my view that leaving the single market would be a catastrophe for the United Kingdom. But retaining Britain’s single market membership starts with making the argument for single market membership, not hiding behind rhetorical tricks about whether or not single market membership was on the ballot last June, when it quite clearly was. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.