The winners of Labour's new policy are not disadvantaged students Photo: Dan Kitwood
Show Hide image

Labour's fees cut blasted by former access chief and Labour supporter

Martin Harris, former head of the Office of Fair Access and a Labour supporter, attacks the party's fees policy.

Labour's planned £3,000 cut in fees has been condemned by a former head of the Office of Fair Access (Offa). Martin Harris, who served as the body's director from its foundation in 2004 until 2012, told the New Statesman that "not a single extra student will go to university” because of the reduction in fees. 

The policy has already been widely-panned,  but the criticism from Harris, a Labour supporter, will be felt more keenly in party circles.

“You can get a much better return on the money you invest by effective forms of outreach and working very closely with schools than you will ever get by giving individual students who have already decided to go to university a sum of £600 or £900,” Harris says. “You could say whether that calls into question whether reducing the fees will have any more effect than putting them up in the first place.”

“That money could be better spent on encouraging young people,” he says. “I can say it now - I'm no longer a government employee. It would be much better spent on identifying students of potential and of capability in schools where there's not a big record of sending students to selective universities, and giving them all the support that is appropriate in those schools.”

Lowering tuition fees to £6,000 will cost the government over £2 billion a year. While the plans are cost neutral –funded by reducing tax relief on pensions for those earning over £150,000 per year - Harris believes the extra money could have been spent far more effectively on university access.  

“You could do a lot of outreach for that, couldn't you?” Harris said. “If Miliband spends all that money, I hope he gives some of it to the schools."

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

Show Hide image

I was wrong about Help to Buy - but I'm still glad it's gone

As a mortgage journalist in 2013, I was deeply sceptical of the guarantee scheme. 

If you just read the headlines about Help to Buy, you could be under the impression that Theresa May has just axed an important scheme for first-time buyers. If you're on the left, you might conclude that she is on a mission to make life worse for ordinary working people. If you just enjoy blue-on-blue action, it's a swipe at the Chancellor she sacked, George Osborne.

Except it's none of those things. Help to Buy mortgage guarantee scheme is a policy that actually worked pretty well - despite the concerns of financial journalists including me - and has served its purpose.

When Osborne first announced Help to Buy in 2013, it was controversial. Mortgage journalists, such as I was at the time, were still mopping up news from the financial crisis. We were still writing up reports about the toxic loan books that had brought the banks crashing down. The idea of the Government promising to bail out mortgage borrowers seemed the height of recklessness.

But the Government always intended Help to Buy mortgage guarantee to act as a stimulus, not a long-term solution. From the beginning, it had an end date - 31 December 2016. The idea was to encourage big banks to start lending again.

So far, the record of Help to Buy has been pretty good. A first-time buyer in 2013 with a 5 per cent deposit had 56 mortgage products to choose from - not much when you consider some of those products would have been ridiculously expensive or would come with many strings attached. By 2016, according to Moneyfacts, first-time buyers had 271 products to choose from, nearly a five-fold increase

Over the same period, financial regulators have introduced much tougher mortgage affordability rules. First-time buyers can be expected to be interrogated about their income, their little luxuries and how they would cope if interest rates rose (contrary to our expectations in 2013, the Bank of England base rate has actually fallen). 

A criticism that still rings true, however, is that the mortgage guarantee scheme only helps boost demand for properties, while doing nothing about the lack of housing supply. Unlike its sister scheme, the Help to Buy equity loan scheme, there is no incentive for property companies to build more homes. According to FullFact, there were just 112,000 homes being built in England and Wales in 2010. By 2015, that had increased, but only to a mere 149,000.

This lack of supply helps to prop up house prices - one of the factors making it so difficult to get on the housing ladder in the first place. In July, the average house price in England was £233,000. This means a first-time buyer with a 5 per cent deposit of £11,650 would still need to be earning nearly £50,000 to meet most mortgage affordability criteria. In other words, the Help to Buy mortgage guarantee is targeted squarely at the middle class.

The Government plans to maintain the Help to Buy equity loan scheme, which is restricted to new builds, and the Help to Buy ISA, which rewards savers at a time of low interest rates. As for Help to Buy mortgage guarantee, the scheme may be dead, but so long as high street banks are offering 95 per cent mortgages, its effects are still with us.