The cuts, student fees and New York

Will the Spending Review bring a new era of lost jobs and broken-down buses? Also, Lord Browne’s uni

The day before George Osborne's Spending Review, a friend was travelling on a London bus that broke down on a busy roundabout during rush hour. He spent the next half an hour directing traffic around the stricken vehicle, as mothers rushed to get small children to school. Was that, he wondered, a taste of what the future holds?

I suspect it is - and it can't be captured in a Chancellor's speech. "Today," began Osborne, with a theatrical flourish, "is the day when Britain steps back from the brink." He quoted various figures, mostly in the billions, which were supposed to amount to a plan to rescue us from bankruptcy. We were asked to believe, for example, that the tax authorities, despite a sharply reduced overall budget, will somehow, by devoting a few million extra to hunting down evaders, net a further £7bn in revenues.

There were many other questionable figures. Whitehall, which was originally to save £3bn on administration, will now save £6bn. That's what departments have told Osborne - to avoid cutting cherished projects, such as turning the NHS upside down - but he can have no idea of whether they are capable of such savings or their effects.

He presented his plan as a transforming moment: a sort of cleansing of the national soul. But the true costs will dribble out slowly, not just in lost jobs but in broken-down buses, unrepaired roads, tacky school buildings, more waits for councils to answer the phone - and even more broken-down buses.

Forward charge

To the indignation of comrades on the left, I have always supported student fees. State services are normally available either universally or according to need. Uniquely, higher education is distributed, supposedly on merit, to a selected group of the population, mostly from affluent homes, allowing access to elite careers to be passed down the generations almost as smoothly as it was in the 19th century. I see no reason why millions of taxpayers on modest incomes should support a service from which they and their families are excluded.

Most of the Browne report's recommendations to increase fees and charge interest on repayments strike me, therefore, as entirely reasonable. Its opponents seem almost wilfully to misunderstand. For example, graduates will start to repay their debts - to the tune of 9 per cent of earnings - only when their annual incomes exceed £21,000. That is 9 per cent of what they receive above £21,000, not 9 per cent of their whole income. A graduate on £30,000, well above the median wage, will be paying £68 a month.

A surprising number of critics seem not to grasp this point. If those on the left are worried about deterring students from poor homes - though there is, so far, little evidence that fees do anything of the sort - they should demand more provision for waiving fees or waiving the interest on them.

Where I part with Browne is on his grimly utilitarian attitude to higher education, which leads him to rule that only medicine, science, technology and some foreign languages are worthy of continued subsidy. Since subjects such as history and literature attract virtually nothing in the way of private research funding or student sponsorship, this could result in the demise of numerous humanities departments. What will that do to the student choice Browne claims to rate so highly? The last thing we want is to corral students into, say, engineering subjects when they have no aptitude for or interest in them. I am reminded of my A-level maths teacher, who expressed relief that I failed the exam and took a humanities degree. Otherwise, he said, bridges would surely have fallen.

Prophets of doom

Remember last year's outrage when Labour announced a rise in income tax to 50 per cent for high earners and imposed a levy on bankers' bonuses? Thousands would flee overseas, we were told, threatening the City of London's future as a financial centre. The Financial Times was particularly alarmist in its predictions. Now, it appears that no such exodus has occurred, except among hedge-fund managers (whom we can probably do without). One firm offered publicly to help relocate teams of staff; it hasn't had a single response. This is hardly surprising when a London banker on £250,000 a year would gain only £15,000 in net income by moving to Geneva and even less from moving to Paris or New York.
I know all this because it was reported by, er, the Financial Times.

Death insurance

We often hear of decisions by the National Institute for Clinical Excellence to deny drugs to cancer patients on the grounds that the extra months of life they may give aren't sufficient to justify the high cost. Sarah Palin has used these examples to claim that the UK has "death panels". But if any country has death panels, it is the US. A new report from the Centre for Policy Studies - written by my former NS deputy, Cristina Odone - cites two cases from Oregon: one involving lung cancer, the other prostate cancer. In both, insurance companies refused to pay for expensive drugs prescribed by doctors. Oregon, however, offers an alternative: it is one of two US states where physician-assisted suicide is legal. The insurance companies said they would gladly pay for that.

Weird tales

Two more aspects of America from my recent holiday in New York. First, an advertisement for a personal storage company, observed on the Manhattan waterfront: "Storing at your parents' means having to visit them." Second, a conversation overheard in the women's restroom (by my wife, I hasten to add): "I've had such a terrible day. Can we meet for a prayer this evening?"

Peter Wilby was editor of the New Statesman from 1998-2005

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 25 October 2010 issue of the New Statesman, What a carve up!