A Labour government would cut fees by £3,000, Ed Miliband has announced. (Photo: Getty)
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Labour's tuition fee policy: not awful, but still pretty bad

Labour's tuition fee policy isn't as bad as I feared. It's still pretty dire.

Labour has finally revealed its manifesto position on higher education funding: the much trailed drop in the tuition fee ceiling from £9,000 per year to £6,000; and a lesser noticed increase in the maintenance grant for students from families with an income of up to £42,000 per year. I’ve written against the tuition fee change previously and, just to put this upfront, I was the most senior civil servant to work on the Browne Review of Higher Education which, in popular perception, ‘paved the way’ to the introduction of £9,000 fees – even though that isn’t what we recommended.

Today’s Labour announcements are, I have to admit, better than I expected for two reasons. But they still represent terrible policy.

Let me cover the positives before I do the rest. The first one is that reducing tuition fees on the face of it reduces the resources that universities have to put on courses. Labour has said definitively though that the drop in fee income will be made up through an increase in direct public funding. No funding gap; no imminent decline in quality. This is good news.

The second positive is that Labour’s changes, in a major departure from previous higher education reforms, will apply to all undergraduates not just new entrants. This means that students who are already in higher education or who may be entering this year – prior to the introduction of the new fee ceiling in 2016 – will incur higher fees until 2016 and then will incur the same lower rate as the new entrants. This is important because it diminishes the risk that lots of people thinking about going to university this year will put off their entry for a year, delaying their careers and emptying out classrooms. If Labour had introduced the lower fee only for new entrants, then there would have been a minimum £9,000 advantage to putting off study for a year (the £3,000 reduction in the fee multiplied by the three years of the typical degree); now the advantage of putting off study is only £3,000, because 2015 entrants will receive the benefit of the future fee decrease in subsequent years.

Okay, enough about the positives. The problems with the policy are legion. The first is that the change is simply unnecessary. University applications are rising, despite the higher fee levels, and the gap between the participation rate of young people from disadvantaged backgrounds and others has continued to reduce. Labour has said the policy will cost £2.7bn a year. It will fund that cost through changes to pension tax relief. But the money could have been used for something else. To put the sum in perspective, it is about twenty times what it costs to avoid dropping the benefits cap to £23,000 per year. Perhaps that example is slightly too remote from higher education, in which case let’s think about the ‘forgotten 50%’ that Labour used to talk about. These are the young people who don’t go to university. £2.7bn per year would be transformative for that group. Merely a sixth of that sum would pay for 200,000 higher level apprenticeships. However, Labour isn’t helping them, instead it’s helping those already fortunate enough to go to university.

In fact the bias of their policy is even more unfortunate than this. Despite Ed Miliband’s rhetoric today about a promise for young people, it isn’t young people that pay tuition fees. Fees are paid back through what looks a lot like a tax on graduates. Reducing the fee level reduces the level of taxation on graduates. And because the ‘tax system’ is progressive in its design, the poorest graduates don’t pay back anything like the full amount of the fees. Labour’s policy in effect is a tax cut for graduates on above-average incomes. Forget about the 50 per cent of young people who don’t go to university, this policy won’t even help the poorest 50 per cent of those who do.

One last dig. Labour has suggested concern over the past few years about postgraduate study. The numbers of UK students going on to postgraduate study looks pretty flat, despite the higher demand for postgraduate skills in an increasingly knowledge-intensive economy. This may in part be because there is far less student finance available for postgraduate study. In order to remedy this, the Chancellor announced an extension of student loans to postgraduate students at the Autumn Statement last year. But that new funding builds on a financing system that Labour has decided is unsustainable. Part of their argument today is that fees have to come down because so many graduates don’t pay them back anyway. It’s difficult to see how Labour could wind back from that position to accept postgraduate student loans, which would take the loan amounts – and hence the non-repayment rate – in the opposite direction to what the party has said it wants. Yet it will already be spending an extra £2.7bn a year in direct public funding on undergraduate higher education. So it’s unlikely that it would be able to find even more direct public funding for postgraduate study.

There is a real risk in other words that a Labour government will spend a lot of money fixing a problem that doesn’t exist in undergraduate education and have nothing left to fix a problem that seems real and pressing to many people in postgraduate education.

Emran Mian is director of the Social Market Foundation

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Theresa May knows she's talking nonsense - here's why she's doing it

The Prime Minister's argument increases the sense that this is a time to "lend" - in her words - the Tories your vote.

Good morning.  Angela Merkel and Theresa May are more similar politicians than people think, and that holds true for Brexit too. The German Chancellor gave a speech yesterday, and the message: Brexit means Brexit.

Of course, the emphasis is slightly different. When May says it, it's about reassuring the Brexit elite in SW1 that she isn't going to backslide, and anxious Remainers and soft Brexiteers in the country that it will work out okay in the end.

When Merkel says it, she's setting out what the EU wants and the reality of third country status outside the European Union.  She's also, as with May, tilting to her own party and public opinion in Germany, which thinks that the UK was an awkward partner in the EU and is being even more awkward in the manner of its leaving.

It's a measure of how poor the debate both during the referendum and its aftermath is that Merkel's bland statement of reality - "A third-party state - and that's what Britain will be - can't and won't be able to have the same rights, let alone a better position than a member of the European Union" - feels newsworthy.

In the short term, all this helps Theresa May. Her response - delivered to a carefully-selected audience of Leeds factory workers, the better to avoid awkward questions - that the EU is "ganging up" on Britain is ludicrous if you think about it. A bloc of nations acting in their own interest against their smaller partners - colour me surprised!

But in terms of what May wants out of this election - a massive majority that gives her carte blanche to implement her agenda and puts Labour out of contention for at least a decade - it's a great message. It increases the sense that this is a time to "lend" - in May's words - the Tories your vote. You may be unhappy about the referendum result, you may usually vote Labour - but on this occasion, what's needed is a one-off Tory vote to make Brexit a success.

May's message is silly if you pay any attention to how the EU works or indeed to the internal politics of the EU27. That doesn't mean it won't be effective.

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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