Protestors against the £9,000 tuition fees outside the University of London in 2010. Photo: Getty
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Student loans policy likely to cost more than the system it replaced – how could they be so wrong?

Tripling fees to £9,000 was a clever exercise in smoke and mirrors accounting. Students and universities are paying the price.

The latest estimate of the costs of the student loan system given by David Willetts, the Universities Minister, comes as no surprise. Both before and after the Coalition rushed through its reform of university funding in 2010, we warned in briefings to MPs that the government’s sums were wrong.

Willetts has now conceded that 45p in the pound of the money lent to students for fee and maintenance loans may never be repaid by graduates. This figure stands in sharp contrast to the Impact Assessment published by his own department of Business, Innovation and Skills. In June 2011 BIS claimed that the write-off would be between 28 and 32 per cent.

Using detailed modelling of the costs of the system undertaken by London Economics, we had no hesitation in providing evidence to the BIS Select Committee which challenged these assumptions. As it turned out the Committee’s MPs were rightly sceptical of the government’s forecasts.

It took until May 2013 for Willetts to throw in the towel and concede that the write-off might be 35p in the pound. By December 2013 an answer reported in Hansard confirmed that the BIS estimate had risen to 40p. Three months later this has increased yet again. It seems that Nick Clegg’s promise that the majority of students will never repay their loans is about to come true but it is hardly good news for taxpayers.

So is this all just an arid argument among economists? Behind all of these figures is a story which goes to the heart of the coalition’s fiscal policies and its belief that higher education should be opened to the market. Tripling fees to £9,000 was a clever exercise in smoke and mirrors accounting which removed direct funding of universities from the BIS departmental budget. Its primary aim was to help George Osborne eradicate the structural deficit by 2015. Lifting the fee cap was also accompanied by policies which favoured private providers which now benefit from double the amount of state-subsidised fee loans than were available under Labour even though they remain largely unregulated.

Unsurprisingly many younger students have opted into higher education even though fees have risen. Unless their parents enjoy considerable wealth, they have little choice but to take out a fee loan if they want to study for a degree. But 30,000 qualified students chose not to progress to university in 2012 and may never return to higher education. Critically participation by part-time and older students has melted away. This is a horrible waste of talent.

Ministers claimed that universities would be better off under their reforms – a claim that is now treated with a great deal of scepticism. By 2015 universities will have had to absorb three further years of cost-cutting with no inflation-proofing. The grant to the Higher Education Funding Council will fall by a further 9 per cent by the date of the election. The NUS is worried about maintenance grants not keeping pace with the cost of living.

Osborne’s response is to lift the cap on student numbers but not provide any additional resources. The idea is that universities will rise or fall according to how well they compete for additional students. Of course, this move will inevitably increase further the amount that taxpayers will have to write-off but there is little mention of this.

It is difficult to understand how or why the coalition got the costs of their higher education reforms so wrong for so long. The thousand dollar question which all political  parties now have to answer is just how they will fund universities in the future to deliver a system that is fair for students, graduates and taxpayers. It’s unlikely that a funding regime that costs 45p in the pound is the solution.

Pam Tatlow is Chief Executive of the university think-tank million+

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A small dose of facts could transform Britain's immigration debate

While "myth-busting" doesn't always work, there is an appetite for a better informed conversation than the one we're having now. 

For some time opinion polls have shown that the public sees immigration as one of the most important issues facing Britain. At the same time, public understanding of the economic and social impacts of immigration is poor and strongly influenced by the media: people consistently over-estimate the proportion of the population born outside the UK and know little about policy measures such as the cap on skilled non-EU migration. The public gets it wrong on other issues too - on teenage pregnancy, the Muslim population of the UK and benefit fraud to name just three. However, in the case of immigration, the strength of public opinion has led governments and political parties to reformulate policies and rules. Theresa May said she was cracking down on “health tourists” not because of any evidence they exist but because of public “feeling”. Immigration was of course a key factor in David Cameron’s decision to call a referendum on the UK’s membership with the EU and has been central to his current renegotiations.  

Do immigration facts always make us more stubborn and confused?

The question of how to both improve public understanding and raise the low quality of the immigration debate has been exercising the minds of those with a policy and research interest in the issue. Could the use of facts address misconceptions, improve the abysmally low quality of the debate and bring evidence to policy making? The respected think tank British Future rightly warns of the dangers associated with excessive reliance on statistical and economic evidence. Their own research finds that it leaves people hardened and confused. Where does that leave those of us who believe in informed debate and evidence based policy? Can a more limited use of facts help improve understandings and raise the quality of the debate?

My colleagues Jonathan Portes and Nathan Hudson-Sharp and I set out to look at whether attitudes towards immigration can be influenced by evidence, presented in a simple and straightforward way. We scripted a short video animation in a cartoon format conveying some statistics and simple messages taken from research findings on the economic and social impacts of immigration.

Targeted at a wide audience, we framed the video within a ‘cost-benefit’ narrative, showing the economic benefits through migrants’ skills and taxes and the (limited) impact on services. A pilot was shown to focus groups attended separately by the general public, school pupils studying ‘A’ level economics and employers.

Some statistics are useful

To some extent our findings confirm that the public is not very interested in big statistics, such as the number of migrants in the UK. But our respondents did find some statistics useful. These included rates of benefit claims among migrants, effects on wages, effects on jobs and the economic contribution of migrants through taxes. They also wanted more information from which to answer their own questions about immigration. These related to a number of current narratives around selective migration versus free movement, ‘welfare tourism’ and the idea that our services are under strain.

Our research suggests that statistics can play a useful role in the immigration debate when linked closely to specific issues that are of direct concern to the public. There is a role for careful and accurate explanation of the evidence, and indeed there is considerable demand for this among people who are interested in immigration but do not have strong preconceptions. At the same time, there was a clear message from the focus groups that statistics should be kept simple. Participants also wanted to be sure that the statistics they were given were from credible and unbiased sources.

The public is ready for a more sophisticated public debate on immigration

The appetite for facts and interest in having an informed debate was clear, but can views be changed through fact-based evidence? We found that when situated within a facts-based discussion, our participants questioned some common misconceptions about the impact of immigration on jobs, pay and services. Participants saw the ‘costs and benefits’ narrative of the video as meaningful, responding particularly to the message that immigrants contribute to their costs through paying taxes. They also talked of a range of other economic, social and cultural contributions. But they also felt that those impacts were not the full story. They were also concerned about the perceived impact of immigration on communities, where issues become more complex, subjective and intangible for statistics to be used in a meaningful way.

Opinion poll findings are often taken as proof that the public cannot have a sensible discussion on immigration and the debate is frequently described as ‘toxic’. But our research suggests that behind headline figures showing concern for its scale there may be both a more nuanced set of views and a real appetite for informed discussion. A small dose of statistics might just help to detoxify the debate. With immigration a deciding factor in how people cast their vote in the forthcoming referendum there can be no better time to try.