What are Osborne's choices now?

The Chancellor can do what’s best for the economy or retain the support of the Tory party faithful. He cannot do both.

The original game plan for the Conservative-led coalition was fairly simple: to eliminate the structural deficit it had inherited within the five-year parliament and ride the global recovery back to economic growth. With that achieved, the Tories’ reputation for economic competence would be restored, promises to end austerity could be made, and a thumping Conservative majority in 2015 would be the just reward. Unfortunately that proved to be one of many over-optimistic projections.

With the Conservatives and Liberal Democrats now trailing Labour in opinion polls, George Osborne appears to face a difficult balancing act between nurturing a pallid economic recovery, maintaining the UK’s AAA credit rating, broadening support for the coalition’s policies, and cementing the loyalty of the Tory party faithful. It seems unlikely that all of these objectives can be achieved simultaneously.

Broadly speaking, the chancellor has three options. First, he could slow the pace of fiscal consolidation over and above simply allowing the "automatic stabilisers" to work, reducing the fiscal drag on the economy. Yet, 90 per cent of those who support the government believe the pace of tightening is about right, or could even be accelerated. With the coalition's austerity programme not even halfway complete, reversing course now would be an admission of failure, a sure-fire way of losing yet more support in the run-up to the 2015 general election.

Alternatively, the Chancellor could maintain the current timetable of austerity but look to spread the pain more broadly across society. Economically, this could make sense. ASR’s UK Household Finances Survey clearly illustrates that those on lower incomes are most insecure in their jobs and are experiencing the most significant financial pressures; shifting more of the burden onto those with broader shoulders could help to free up disposable income and support consumer spending. But again, this issue polarises opinion.

Finally, the Chancellor could look to stay the course and stick with the current strategy. This is not as simple as it sounds. As the Institute for Fiscal Studies has pointed out, another £27bn of cuts will need to be specified if the Chancellor is to meet his fiscal envelope. Assuming the coalition endorses the opinions advanced in the Household Finances Survey and maintains the sacrosanctity of the NHS and education, this would leave other departments facing unprecedented cuts of 16 per cent in real-terms during the three years to 2017-18 – areas such as the police, defence and transport. Such cuts look unviable and would prove unpopular. In other words, maintaining the status quo is a false option; the Chancellor will have to either inflict further pain on some segments of society or abandon his remaining fiscal targets before the next election in 2015.

Is there a third way? A boost to public investment notionally financed through the private sector seems like a possible method of fiscal support. This would achieve the multiple aims of supporting growth in the near-term, enhancing the supply-side of the economy and keeping debt off the public sector’s balance sheet. Already, the government plans to guarantee £40bn of loans to finance infrastructure projects, with projects worth £10bn already under consideration. Similar schemes, such as privately-contracted road pricing schemes, might also be considered.

Otherwise, this leaves the British government looking like Mr Micawber, simply hoping that "something will turn up". There are two potential saviours. The government could lean on the Bank of England further, adapting its mandate to provide additional monetary support above and beyond that consistent with its inflation target. At the very least, further rounds of Quantitative Easing look likely. Alternatively, the rest of the world could come to the UK's rescue. A global recovery – particularly one that spreads to the eurozone – would provide a source of demand where currently there is none. Ironically, the UK public’s growing hostility towards the EU comes at a time when it needs Europe more than ever.

Dominic White is chief European economist and Richard Mylles is a political risk analyst at Absolute Strategy Research

Chancellor George Osborne leaves Number 11 Downing Street. Photograph: Getty Images.

Dominic White is chief European economist and Richard Mylles is a political risk analyst at Absolute Strategy Research

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Working class girls don't threaten our universities, they enrich them

Widening participation is good for universities because it enables them to recruit the students who have the very highest potential, regardless of their personal circumstances.

British universities are under threat. People working in higher education have known this for a while. But it isn’t funding cuts, or high fees, or casualisation, or Prevent, or even ‘safe spaces’, that threaten universities the most. No – it’s a working class girl with a UCAS form and a library card.

Earlier this month, the Telegraph reported that ‘experts’ think universities are slipping down the international league tables because they are forced to recruit ‘diverse’ or ‘disadvantaged’ students. When I read Chris Patten’s comments, a couple of weeks later, that quotas for students from non-traditional backgrounds would lead to ‘lower standards’, it confirmed what I had always known: there are some people who think that people like me just don’t belong in higher education.

When I applied for university, I was a free school meals student at a sixth form at my local comprehensive school. When my university admitted me to study history as an undergraduate, they did so knowing that I wasn’t from a private school, or even a selective school; I wasn’t following my father or grandfather into the ‘family college’ (as I once heard someone describe Balliol). I knew I was different when I arrived: my family had never taken a foreign holiday or bought a new car, and it was sometimes a struggle to buy food or pay bills. This hadn’t marked me out as especially different at home in rural Lincolnshire, but it did at university in London. I remember talking about family members having been on the dole in a seminar about Thatcherism, and being looked at with unconcealed fascination, by students who had never met anybody like me.

The excellent teaching and personal support I got as an undergraduate meant that I never really felt like I didn’t belong. I benefited directly from widening participation initiatives, which were in their infancy when I was an undergraduate; for example, I received a series of small grants from my department to help to support me financially while I studied. When I returned to UCL to complete my PhD (which I was only able to do because both my MSc and PhD were fully funded), I worked for several years as part of the widening participation and outreach team. We brought able students from non-traditional backgrounds to UCL to give them a taste of university life and to encourage them to pursue a future in higher education. Working on these Saturday schools and summer schools was the most rewarding teaching that I did during my PhD.

Because, the thing is, these students – ‘diverse’ students, ‘disadvantaged’ students, students from ‘non-traditional backgrounds’ – can be some of the most rewarding to teach. They are certainly able to hold their own against the more ‘traditional’ intake of British elite universities. In fact, research has demonstrated that students from state schools actually outperform their peers from private schools who were admitted to university with the same A-levels.

This isn’t surprising, really: if you had to learn to motivate yourself throughout your GCSEs and A-levels because your teachers had to focus on keeping order in a disruptive classroom, if you had to carve out space on a kitchen table or in a public library to do your homework because you don’t have your own room or your own computer , if your grades are the result not of private tutoring but of dedicated and diligent independent work - then you are likely to be an excellent undergraduate student, capable of time-management, self-motivation, hard graft. If you have managed to navigate the UCAS admissions process yourself, because your parents didn’t go to university and don’t know how to help you, or because your school only sends a few students on to do degrees every year, you are probably going to be dedicated to making the most of what you have achieved.

Everybody should have access to higher education, regardless of background or upbringing (and, it should go without saying, regardless of race, ethnicity or gender). But this isn’t just an issue of fairness – these ‘non-traditional’ students are good for universities, too.  When I read that recruiting “disadvantaged and ethnic minority students” was “distracting [universities] from research and high-calibre teaching”, I actually laughed. Widening participation is good for universities because it enables them to recruit the students who have the very highest potential, regardless of their personal circumstances. But more than this – it creates an environment where the very best research and teaching can be carried out.

I teach modern British history. I work on class difference, on post-imperial migration, on ideas about inequality and identity and ‘British values’ and what it means to live in Britain today. I can’t do that effectively if all of my students and all of my colleagues come from the same narrow group. In my teaching, I hope I make it easier for all of my students to celebrate their own diverse and non-traditional backgrounds, whatever they may be. Because academia needs diversity. If we are going to produce work that is relevant and exciting and interesting we need a plurality of voices, not the same old pale-male-stale viewpoints. Universities aren’t being threatened by these students – they are being enriched. 

Charlotte Riley is a lecturer in 20th Century British History at the University of Southampton