Will cutting fees to £6,000 actually help? Photo: Getty
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What does Lord Mandelson's tuition fees warning to Labour reveal about its policy?

The former Labour Business Secretary is to warn Labour about their imminent higher education pledge.

The former Labour Business Secretary, Peter Mandelson, is set to warn his party about their imminent higher education pledge. Mandelson, whose department received the universities and skills brief during the New Labour years, is intervening ahead of Labour's expected announcement of a cut in tuition fees.

The Guardian reports that the Labour peer will suggest any reform to tuition fees has to ensure that the current range and flow of funding into universities from all available sources is sustained. He is also expected to voice his concern about making a higher education pledge before the election, believing it would be better to resolve the issue when in government.

In Mandelson's opinion, the levers of government would allow the party to tackle the extremely complex long-term funding implications of changing tuition fees. It would also provide Labour the opportunity to properly consider the impact if a graduate tax were introduced, a policy that the shadow universities minister Liam Byrne told me is his preferred option.

Mandelson will make his comments about Labour's upcoming policy in a speech to Universities UK today, as the Labour leadership continues to grapple with its tuition fees announcement, which has long been expected to arrive this month.

The party is a little stuck with its higher education promise. Even as far back as 2011, and repeatedly since then, Miliband and other senior Labourites have said that were they currently in government (I hear Labour politicians were instructed to speak strictly "in the subjunctive" on this subject), they would introduce £6,000 tuition fees, down from the coalition's controversial £9,000.

Yet the party has not officially announced this policy, and seems to be in limbo. I hear from a shadow cabinet aide that the shadow chancellor Ed Balls is "happy" for Labour to cut tuition fees, but needs the party to find the money to cost such a policy, and so Labour is waiting on coming up with a funding plan. Another obstacle is that although cutting tuition fees is a popular policy, university vice chancellors have been forthright against a tuition fee cut, and there is the argument that the coalition tripling the fees has not actually put pupils off applying to university. A better policy, as Tim has written, would be to help disadvantaged students with maintenance funding, rather than cutting their tuition fees.

On the BBC's Today programme this morning, the Business Secretary Vince Cable defending the Lib Dems' agreement to a hike in tuition fees, referred to Labour being stuck on its policy: "As I understand it, the people who are advising Ed Miliband and his team are telling him that this is a very foolish thing to do because it will either open a very large hole in their budget or it will be funded by quite serious cuts in universities, which is the last thing we want."

It could be that there are other plans in the mix, to mitigate the cost of helping out students financially. One shadow cabinet aide close to the tuition fees wrangling tells me there has been talk among some of a system like New Zealand’s, which has interest-free student loans.

Labour's tuition fees announcement was supposed to take place in February, which means the party only has a week left to reveal its policy. Apparently, this decision now lies with Miliband. As the party is planning to unveil its "young people's manifesto" at the end of this month, it may coincide with that.

Anoosh Chakelian is senior writer at the New Statesman.

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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.