Why higher tuition fees have left a £1bn-a-year black hole

Nick Clegg said the deficit meant fees had to rise. But the new system will cost the government more.

In defending the coalition's decision to triple tuition fees from £3,000 to £9,000, Nick Clegg has frequently pointed to the size of the deficit. For instance, he commented in 2010:

At the time I really thought we could do it [not increase tuition fees]. I just didn't know, of course, before we came into government, quite what the state of the finances were [sic].

In reality, for the reminder of this parliament at least, the reforms will cost the government more, not less. The new fees only came into effect this year, which means repayments won't kick in until 2015 for a three-year course. In the intervening period, the government will be forced to pay out huge amounts in maintenance loans and tuition-fee loans, not least because three-quarters of universities are planning to charge £9,000 for some courses next year, with a third charging the maximum fee for all (minister previously insisted they would only do so in "exceptional circumstances").

As a result, according to a new report by the Higher Education Policy Institute (HEPI), the coalition faces a £1bn-a-year black hole in university funding. Having "seriously understated" the cost of its reforms, the report warns that the government will either have to dramatically reduce student numbers, ask graduates to make higher repayments, or pass the bill on to future taxpayers.

It cites three reasons why the new system will cost the government more than previously thought. First, while ministers predicted an average fee of £7,500, the actual figure is £8,234, forcing students to take out higher tuition fee loans. Second, while the Treasury expects a 32 per cent shortfall in loans repayment, the Institute for Fiscal Studies believes the figure will be closer to 37 per cent. The government currently assumes that the average male graduate will be earning £75,000 a year in 30 years time (a reduction from an earlier estimate of £100,000) , a figure that looks excessively optimistic. Finally, the new fees system adds 0.2 percentage points to CPI inflation, triggering rises in benefits and pensions of between £420m and £1.14bn a year (unless, of course, the government, as has been widely speculated, freezes benefits).

The report concludes:

A slightly higher [repayments] cost or a slightly greater inflationary effect than the most optimistic that we have considered here would mean that the present policy is actually more expensive than the one it has replaced.

With the government likely to simply pass the cost on to the taxpayer (as would happen in a purely state-funded system), Clegg's party is entitled to ask, what was all the pain for?

Student demonstrators march against higher tuition fees in London in 2010. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Owen Smith is naïve if he thinks misogynist abuse in Labour started with Jeremy Corbyn

“We didn’t have this sort of abuse before Jeremy Corbyn became the leader.”

Owen Smith, the MP challenging Jeremy Corbyn in the Labour leadership contest, has told BBC News that the party’s nastier side is a result of its leader.

He said:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.

“It’s now become something that is being talked about on television, on radio, and in newspapers. And Angela is right, it has been effectively licenced within the last nine months.

“We’re the Labour party. We’ve got to be about fairness, and tolerance, and equality. It’s in our DNA. So for us to be reduced to this infighting is awful. Now, I understand why people feel passionately about the future of our party – I feel passionately about that. I feel we’re in danger of splitting and being destroyed.

“But we can’t tolerate it. And it isn’t good enough for Jeremy simply to say he has threats too. Well, I’ve had death threats, I’ve had threats too, but I’m telling him, it’s got to be stamped out. We’ve got to have zero tolerance of this in the Labour party.”

While Smith’s conclusion is correct, his analysis is worryingly wrong.

Whether it is out of incompetence or an unwillingness to see the extent of the situation, Corbyn has done very little to stamp out abuse in his party, which has thus been allowed to escalate. It is fair enough of Smith to criticise him for his failure to stem the flow and punish the perpetrators.

It is also reasonable to condemn Corbyn's inability to stop allies like Chancellor John McDonnell and Unite leader Len McCluskey using violent language (“lynch mob”, “fucking useless”, etc) about their opponents, which feeds into the aggressive atmosphere. Though, as I’ve written before, Labour politicians on all sides have a duty to watch their words.

But it’s when we see how Smith came to the point of urging Corbyn to take more responsibility that we should worry. Smith confidently argues that there wasn’t “this sort of abuse and intolerance, misogyny, antisemitism” in the party before Corbyn was voted in. (I assume when he says “this sort”, he means online, death threats, letters, and abuse at protests. The sort that has been high-profile recently).

This is naïve. Anyone involved in Labour politics – or anything close to it – for longer than Corbyn’s leadership could tell Smith that misogyny and antisemitism have been around for a pretty long time. Perhaps because Smith isn’t the prime target, he hasn’t been paying close enough attention. Sexism wasn’t just invented nine months ago, and we shouldn’t let the belief set in that it did – then it simply becomes a useful tool for Corbyn’s detractors to bash him with, rather than a longstanding, structural problem to solve.

Smith's lament that “it’s now become something that is being talked about” is also jarring. Isnt it a good thing that such abuse is now being called out so publicly, and closely scrutinised by the media?

In my eyes, this is a bit like the argument that Corbyn has lost Labour’s heartlands. No, he hasn’t. They have been slowly slipping away for years – and we all noticed when Labour took a beating in the last general election (way before Corbyn had anything to do with the Labour leadership). As with the abuse, Corbyn hasn’t done much to address this, and his inaction has therefore exacerbated it. But if we tell ourselves that it started with him, then we’re grasping for a very, very simple solution (remove Corbyn = automatic win in the North, and immediate erasure of misogyny and antisemitism) to a problem we have catastrophically failed to analyse.

Anoosh Chakelian is deputy web editor at the New Statesman.