The Tory-Lib Dem university battle isn't over yet

Lifting the penalty on early student loan repayments won't be enough to keep the Tories happy.

The government's tuition fees package, you'll recall, was filleted with "progressive" amendments designed to persuade recalcitrant Lib Dems to back the plans. But we learn from the Daily Telegraph this morning that one of those concessions - fining graduates who pay off their student loans early - has been revoked.

Vince Cable had planned to impose a five per cent charge on the value of early repayments in an attempt to prevent "wealtheir students" from avoiding interest charges. Back in October 2010, the Business Secretary said:

There is an issue about people who go on to very high-earning jobs and who therefore pay off relatively quickly and we do have to think about how to find a way by which they make some sort of contribution towards low-earning graduates.

It was always a dubious proposal. Some of the wealthiest students (or, more accurately, the children of wealthy parents) bypass the loan system altogether by paying their university fees upfront. Indeed, as the liberal think-tank Centre Forum observed, it would likely be low-income graduates who lost out since "debt aversion not affluence is the biggest cause of early repayments".

But this isn't just about bad policy. The Lib Dems agreed to abandon the proposal as a quid pro quo for the appointment of Prof Les Ebdon as the director of the Office for Fair Access. Although Cable's favoured candidate, Ebdon was attacked by the Tories as a supporter of "social engineering", with Michael Gove privately lobbying against his appointment and the business select committee voting against it.

One Downing Street source cheerfully tells the Telegraph:

The Lib Dems were very keen to appoint Ebdon and we felt very strongly about penalties for early repayment of loans. This is hopefully good news for tens of thousands of families, as well as many Conservative MPs who had raised concerns about the penalties.

But it's hard to imagine Tory MPs will be so sanguine. It is they, rather than the Lib Dems, who look like the losers from this affair. The abandoment of early repayment charges is a minor concession that, in most Tories' eyes, hardly compensates for Ebdon's three-year appointment.

To the consternation of the Russell Group, Ebdon has threatened to forbid universities from charging the maximum £9,000 tuition fee if they do not meet targets on widening participation. An option he describes, in language strikingly reminiscent of Cable, as "the nuclear button".

Cable will confirm Ebdon's appointment next week but expect Tory MPs to take every opportunity to undermine him.

George Eaton is political editor of the New Statesman.

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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