Why tuition fees will cost six times more than they save

The coalition promised to reduce the cost to the taxpayer. But reduced university participation and higher inflation mean we'll end up paying more.

In his first Spending Review as Chancellor, George Osborne announced that the government had rejected a graduate tax but would reform higher education funding in England, requiring better-off graduates to pay more. The aim was to "reduce considerably the contribution that general taxpayers make to higher education". The switch from the direct funding of universities to indirect funding via student loans also helped Osborne to reduce the structural deficit which he said would be eliminated by 2015.

Ministers wasted no time. By December, the direct funding of universities was cut by 40 per cent over three years. Conservative and Liberal Democrat MPs voted through a three-fold increase in the maximum annual tuition fee that a university in England could charge, increasing the latter to £9,000. As a result, full-time students entering university for the first time in 2012 have been charged an average fee of £8,340 with a matching state-backed loan. Maintenance grants have increased marginally. For the first-time, part-time students can access fee (but not maintenance) loans although their course grants have been cut. All student loans will increase by RPI plus 3 per cent.

Unsurprisingly, the number of students entering university fell by at least 30,000 in 2012 with a further, dramatic decline in part-time participation. Applications for 2013 offer a glimmer of hope that there may be a recovery. Even if student interest increases (not forgetting that the coalition has cut the total number of funded places by 25,000 but has yet to put any ceiling on private provider numbers) does Osborne’s assertion that this is a good deal for taxpayers still stand up?

In the second of a series of pamphlets on higher education funding, the university think-tank million+ and London Economics set out to examine the case. Are the changes to higher education funding in England cost-effective uses the latest information from the Labour Force Survey, the Funding Council, the Office of Fair Access, the Higher Education Statistics Agency and BIS, the department responsible for universities, to model the 2012 changes.

All in all, the Treasury can claim to have saved £1.666bn per student cohort. This is largely the result of the reduction in direct grant to universities but takes into account the eye-watering increase in the Resource and Accounting Budget charge (a calculation of the proportion of the loan value that is not expected to be repaid). The Office for Budget Responsibility has already estimated that the loan book will almost double to £9bn. We estimate that over a 30-year repayment period the taxpayer will write-off almost 40 per cent of the loans that students take out.

Once the loss to the Treasury of reduced participation (which in turn leads to reduced tax receipts) and the inflationary impact of higher tuition fees are taken into account, the short-term savings will be outweighed almost six and a half times by the long-term costs of the new system. 

Although the inflationary shock seems to have surprised the outgoing governor of the Bank of England, Mervyn King, both the Consumer Price Index and the Retail Price Index will increase in the first three years of the introduction of higher fees. Not the most popular policy at the best of times, the government’s higher education reforms may lose their sheen even more if consumers work out that regulated rail fares, water bills and postage stamps will increase in part as a result of higher  fees. 

In spite of the cap on working-age benefits from April 2013, the Treasury will make additional payments of £42m and £163m on public sector and state pensions. The Treasury will also pick up the tab because a proportion of its own borrowing is linked to RPI. The government has issued £294bn in index-linked gilts. In 2012 alone it is estimated that the Treasury will pay an additional £655m in interest repayment arising from the tuition fee hike.

Ministers claim that the new funding regime has helped to avoid a further cut in funded student numbers and maintained university funding. In fact, institutional 'gains' will not be evenly distributed and stand to be wiped out completely if 42,000 fewer students are deterred from studying for a degree. There is also the real risk that the unit of resource will be reduced in universities which have done the most to open higher education to new generations of students.

The 2012 changes to university funding undoubtedly have the effect of reducing departmental expenditure. On paper, the reforms also reduce the structural deficit but mask the fact that the government will borrow more.

When all is done and dusted, the changes to university funding in England are an accountancy measure. In economic terms, it’s much harder to see how Osborne’s higher education promise to taxpayers will stack up in the long-term.

 

Pam Tatlow is chief executive of the university think-tank million+. The research was undertaken by Dr Gavan Conlon, an expert in HE finance and partner at London Economics

Demonstrators hold placards as they gather before the start of a student rally in central London on November 21, 2012 against an increase in university tuition fees. Photograph: Getty Images.
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Harmful gender stereotypes in ads have real impact – so we're challenging them

The ASA must make sure future generations don't recoil at our commercials.

July’s been quite the month for gender in the news. From Jodie Whittaker’s casting in Doctor Who, to trains “so simple even women can drive them”, to how much the Beeb pays its female talent, gender issues have dominated. 

You might think it was an appropriate time for the Advertising Standards Authority (ASA) to launch our own contribution to the debate, Depictions, Perceptions and Harm: a report on gender stereotypes in advertising, the result of more than a year’s careful scrutiny of the evidence base.

Our report makes the case that, while most ads (and the businesses behind them) are getting it right when it comes to avoiding damaging gender stereotypes, the evidence suggests that some could do with reigning it in a little. Specifically, it argues that some ads can contribute to real world harms in the way they portray gender roles and characteristics.

We’re not talking here about ads that show a woman doing the cleaning or a man the DIY. It would be most odd if advertisers couldn’t depict a woman doing the family shop or a man mowing the lawn. Ads cannot be divorced from reality.

What we’re talking about is ads that go significantly further by, for example, suggesting through their content and context that it’s a mum’s sole duty to tidy up after her family, who’ve just trashed the house. Or that an activity or career is inappropriate for a girl because it’s the preserve of men. Or that boys are not “proper” boys if they’re not strong and stoical. Or that men are hopeless at simple parental or household tasks because they’re, well...men.

Advertising is only a small contributor to gender stereotyping, but a contributor it is. And there’s ever greater recognition of the harms that can result from gender stereotyping. Put simply, gender stereotypes can lead us to have a narrower sense of ourselves – how we can behave, who we can be, the opportunities we can take, the decisions we can make. And they can lead other people to have a narrower sense of us too. 

That can affect individuals, whatever their gender. It can affect the economy: we have a shortage of engineers in this country, in part, says the UK’s National Academy of Engineering, because many women don’t see it as a career for them. And it can affect our society as a whole.

Many businesses get this already. A few weeks ago, UN Women and Unilever announced the global launch of Unstereotype Alliance, with some of the world’s biggest companies, including Proctor & Gamble, Mars, Diageo, Facebook and Google signing up. Advertising agencies like JWT and UM have very recently published their own research, further shining the spotlight on gender stereotyping in advertising. 

At the ASA, we see our UK work as a complement to an increasingly global response to the issue. And we’re doing it with broad support from the UK advertising industry: the Committees of Advertising Practice (CAP) – the industry bodies which author the UK Advertising Codes that we administer – have been very closely involved in our work and will now flesh out the standards we need to help advertisers stay on the right side of the line.

Needless to say, our report has attracted a fair amount of comment. And commentators have made some interesting and important arguments. Take my “ads cannot be divorced from reality” point above. Clearly we – the UK advertising regulator - must take into account the way things are, but what should we do if, for example, an ad is reflecting a part of society as it is now, but that part is not fair and equal? 

The ad might simply be mirroring the way things are, but at a time when many people in our society, including through public policy and equality laws, are trying to mould it into something different. If we reign in the more extreme examples, are we being social engineers? Or are we simply taking a small step in redressing the imbalance in a society where the drip, drip, drip of gender stereotyping over many years has, itself, been social engineering. And social engineering which, ironically, has left us with too few engineers.

Read more: Why new rules on gender stereotyping in ads benefit men, too

The report gave news outlets a chance to run plenty of well-known ads from yesteryear. Fairy Liquid, Shake 'n' Vac and some real “even a woman can open it”-type horrors from decades ago. For some, that was an opportunity to make the point that ads really were sexist back then, but everything’s fine on the gender stereotyping front today. That argument shows a real lack of imagination. 

History has not stopped. If we’re looking back at ads of 50 years ago and marvelling at how we thought they were OK back then, despite knowing they were products of their time, won’t our children and grandchildren be doing exactly the same thing in 50 years’ time? What “norms” now will seem antiquated and unpleasant in the future? We think the evidence points to some portrayals of gender roles and characteristics being precisely such norms, excused by some today on the basis that that’s just the way it is.

Our report signals that change is coming. CAP will now work on the standards so we can pin down the rules and official guidance. We don’t want to catch advertisers out, so we and CAP will work hard to provide as much advice and training as we can, so they can get their ads right in the first place. And from next year, we at the ASA will make sure those standards are followed, taking care that our regulation is balanced and wholly respectful of the public’s desire to continue to see creative ads that are relevant, entertaining and informative. 

You won’t see a sea-change in the ads that appear, but we hope to smooth some of the rougher edges. This is a small but important step in making sure modern society is better represented in ads.

Guy Parker is CEO of the ASA