The tuition fees effect

University applications plummet by 9 per cent after fee cap is raised to £9,000.

The biggest test of the coalition's decision to raise the tuition fee cap to £9,000 is whether it leads to fewer people applying to university. Despite abolishing Labour's target of sending 50 per cent of young people to university, ministers are insistent that they still want more to go.

But the figures published by UCAS today suggest that fewer will do so. Compared with the same period last year, total applications are down by 9 per cent, with applications from UK residents down by 11.9 per cent and applications from EU residents down by 9.3 per cent (applications from non-EU residents are up by 8.8 per cent).

Fees rise, applications fall

Applications are down by 9 per cent compared to last year 

(Click graph to enlarge)

It's important to note that these are interim figures and only cover applications to Oxbridge, medicine, dentistry and veterinary science, which must be received by 15 October. As Nicola Dandridge, the chief executive of Universities UK, points out:

Historically, the application figures at the end of October have proven to be unreliable indicators of the final numbers. It may also be that students are taking longer this year to consider their options.

But the figures do suggest that the fees rise is deterring at least some prospective students from applying (47 of England's 123 universities plan to charge £9,000 for all courses). As the graph above shows, this is the first time that applications have fallen in the last five years.

The only comfort for ministers is that student numbers also fell when fees were raised to £3,000-a-year in 2006 but recovered in subsequent years. But if there is a sustained fall in applications (particularly from poorer pupils) then the policy will be viewed as a failure. As Steve Smith, the recently departed head of Universities UK, told me when I interviewed him earlier this year, "If lower socio-economic class participation goes down, we've made a major mistake".

Update: A commenter (The Law) asks why applications to Scottish universities are also down (by 11.8 per cent) if higher fees are deterring pupils. The likely explanation is that English, Welsh and Northern Irish students, unlike their Scottish and EU counterparts, all pay full fees at Scottish universities.

George Eaton is political editor of the New Statesman.

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How can Britain become a nation of homeowners?

David Cameron must unlock the spirit of his postwar predecessors to get the housing market back on track. 

In the 1955 election, Anthony Eden described turning Britain into a “property-owning democracy” as his – and by extension, the Conservative Party’s – overarching mission.

60 years later, what’s changed? Then, as now, an Old Etonian sits in Downing Street. Then, as now, Labour are badly riven between left and right, with their last stay in government widely believed – by their activists at least – to have been a disappointment. Then as now, few commentators seriously believe the Tories will be out of power any time soon.

But as for a property-owning democracy? That’s going less well.

When Eden won in 1955, around a third of people owned their own homes. By the time the Conservative government gave way to Harold Wilson in 1964, 42 per cent of households were owner-occupiers.

That kicked off a long period – from the mid-50s right until the fall of the Berlin Wall – in which home ownership increased, before staying roughly flat at 70 per cent of the population from 1991 to 2001.

But over the course of the next decade, for the first time in over a hundred years, the proportion of owner-occupiers went to into reverse. Just 64 percent of households were owner-occupier in 2011. No-one seriously believes that number will have gone anywhere other than down by the time of the next census in 2021. Most troublingly, in London – which, for the most part, gives us a fairly accurate idea of what the demographics of Britain as a whole will be in 30 years’ time – more than half of households are now renters.

What’s gone wrong?

In short, property prices have shot out of reach of increasing numbers of people. The British housing market increasingly gets a failing grade at “Social Contract 101”: could someone, without a backstop of parental or family capital, entering the workforce today, working full-time, seriously hope to retire in 50 years in their own home with their mortgage paid off?

It’s useful to compare and contrast the policy levers of those two Old Etonians, Eden and Cameron. Cameron, so far, has favoured demand-side solutions: Help to Buy and the new Help to Buy ISA.

To take the second, newer of those two policy innovations first: the Help to Buy ISA. Does it work?

Well, if you are a pre-existing saver – you can’t use the Help to Buy ISA for another tax year. And you have to stop putting money into any existing ISAs. So anyone putting a little aside at the moment – not going to feel the benefit of a Help to Buy ISA.

And anyone solely reliant on a Help to Buy ISA – the most you can benefit from, if you are single, it is an extra three grand from the government. This is not going to shift any houses any time soon.

What it is is a bung for the only working-age demographic to have done well out of the Coalition: dual-earner couples with no children earning above average income.

What about Help to Buy itself? At the margins, Help to Buy is helping some people achieve completions – while driving up the big disincentive to home ownership in the shape of prices – and creating sub-prime style risks for the taxpayer in future.

Eden, in contrast, preferred supply-side policies: his government, like every peacetime government from Baldwin until Thatcher’s it was a housebuilding government.

Why are house prices so high? Because there aren’t enough of them. The sector is over-regulated, underprovided, there isn’t enough housing either for social lets or for buyers. And until today’s Conservatives rediscover the spirit of Eden, that is unlikely to change.

I was at a Conservative party fringe (I was on the far left, both in terms of seating and politics).This is what I said, minus the ums, the ahs, and the moment my screensaver kicked in.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.