Investment in education is key to reducing the deficit

Spending on higher education yields a long-term economic benefit for Britain.

One of the strangest claims in the current debate on education is that raising student fees will enable British universities to compete internationally. If we take just the "elite" universities, this is already happening – four out of the world's top 20 universities are British.

As ever, the devil is in the detail. If you sift closely through the Browne review, you will see he recommends that no extra resources be made available for higher education, the proposed increase in fees being designed to compensate for the withdrawal of funds from central government.

If the government follows Browne's advice, the chronic underfunding of higher education will deepen and Britain will fall further behind our economic competitors. In the space of eight years, the UK has gone from having the third-highest graduation rate among industrialised countries to languishing in 15th place, according to the latest OECD survey.

This irrational approach mirrors the economic debate, which has become dominated by the Budget deficit. However, the deficit is a symptom of the economic crisis, not its cause. And cutting spending will depress activity further, which will depress tax revenues and lead to deficit widening.

Education can and must be allowed to play a leading role in any revival. However, for that to happen, the government needs to follow the advice of the OECD, which recently recommended increasing investment in higher education to create jobs and raise tax revenues.

Annual spending on higher education in Britain is £23bn, for which the Treasury gets back an estimated return of £60bn. This arises from various sources, including jobs, exports, innovation, royalties and so on. There is also a long-term economic benefit, which is slightly harder to measure, that comes from a more highly educated and productive population.

That £60bn is a return on investment and highlights the madness of cutting spending on higher education. Spending cuts will lose jobs, exports and innovation.

The cuts are all made in the name of being fiscally responsible, getting the deficit under control and not living beyond our means – the economic saws of Thatcherism. Yet not only will the economy suffer as a result of education cuts, but government finances will deteriorate as result.

This arises from two effects. First, taxes will fall as a result of a weaker economy. Second, spending will end up higher as the government is forced to shell out millions in welfare payments to those denied places in education and made redundant from university jobs, including teachers and clerical, cleaning and catering staff.

If we look closely, the government's economics simply do not add up. A £1bn cut in spending on higher education leads to £2.6bn in decreased activity. This decrease in activity leads to both lower tax revenues and higher government spending, as mentioned above.

The same process also operates in reverse – an increase of investment in higher education will produce a positive net return to government finances through increased activity and the higher tax revenues, as well as the lower welfare payments that flow from it. Every £1bn increase in investment in this sector would produce a positive return to government finances, which could be used either to reduce the Budget deficit or to fund further much-needed investment, for even greater return.

Sally Hunt is general secretary of the University and College Union and Michael Burke is a former senior international economist for Citibank London.

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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