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What the US can teach Oxbridge

David Lammy was right to raise concerns about how few black students there are at Britain’s elite un

The coalition may have won the vote on tuition fees but it was a close call. It was rather fun to watch Nick Clegg and Vince Cable trying to wriggle out of the mess they had created for themselves. The Lib Dems' ratings fell to 8 per cent in a recent YouGov poll.

I am very concerned about the government's tuition fee proposals, which appear to have a major funding hole that no one seems to want to talk about. It remains unclear how univer­sities are supposed to get their funding over the next few years, given that the government is cutting their teaching budgets by 80 per cent. Promises of payback by graduates some time in the future won't help now. Universities are going to have to borrow on the security of the promised income stream. One possibility would be for them to issue bonds, presumably on the back of some sort of government guarantee, which would inevitably increase the deficit. The quality of education is likely to drop just as its price rises.

Why should the young be singled out for such harsh treatment - with the Education Maintenance Allowance cut and increases in tuition fees - when older folks have been protected? Old people have non-means-tested bus passes and winter fuel allowances, which means that there are many company directors earning more than £100,000 who enjoy these freebies.

The NHS, which mainly supports the elderly, has been protected from cuts for reasons that were never fully made clear. Given the fixed target for public-sector savings, this has meant that cuts elsewhere have had to be significantly ramped up. No wonder the young are cross.

Poor boy blues

Unusually, I found myself agreeing with Max Hastings, who argued in the Daily Mail: "The truth is that the money no longer exists to provide everyone with a free pass to higher education." The worry is that raising fees will further reduce access for the poor and minorities.

The Labour MP and former higher education minister David Lammy, writing in the Guardian on 6 December, reported back on responses to a series of Freedom of Information requests which suggest that getting a place at Oxford and Cambridge "remains a matter of being white, middle-class and southern". He noted that David Cameron's alma mater Brasenose College, Oxford, recruits 92 per cent of its students from the top three social classes - the sons and daughters of solicitors and accountants. The average for UK universities is 65 per cent. Lammy also found that only one British, black, Caribbean student was admitted to Oxford last year. Merton College has not admitted a single black student in five years. Black students are applying - but they are not being accepted.

Cameron reiterated concerns on 8 December that the current system had hurt social mobility, saying: "Oxford and Cambridge take more students each year from just two schools - Eton and Westminster - than from among the 80,000 pupils who are eligible for free school meals." It isn't that way where I work. More than a third of Dartmouth's students are minorities, including 7.6 per cent African Americans. Thirteen per cent of our students receive Pell Grants, which are given to students with family incomes under $20,000. Some 10 per cent are the first generation in their family to attend college.

We operate needs-blind admissions, even for foreign students, which means that if you are poor, we pay. Harvard, Princeton and Yale operate comparable policies and have similarly diverse student bodies. There are no sports or merit scholarships in the Ivy League.

US universities generally do not just look at the results of SAT test scores, but look more broadly at achievement to ensure the system doesn't work against those from poorer backgrounds. Dartmouth gives particular weight to an individual's high-school rank. Over a third of our students are first in their high-school class, the so-called valedictorians.

To put it bluntly, the idea is to ensure that there is a level playing field, so that the (smarter) black youngster with a slightly lower SAT score from a poor family in the Bronx is able to compete on more equal terms against the (dumber) rich white boy with an expensive private education and a higher SAT score achieved in no small part by lots of tutoring for the test. This is about trying to determine ability and potential. Harvard and Dartmouth take the black kid from the Bronx with an off-the-scale IQ, who will get a free ride for all four years. Oxford takes the rich white guy.

Minority report

Sally Mapstone - Oxford's pro-vice-chancellor for personnel and (lack of) equality, who is also apparently an expert in older Scots literature and book history, whatever that is - responded to Lammy the next day in the Guardian, denying discrimination.

She did not deny that Oxford has a far from diverse student body, but argued that it was not the university's fault - black candidates applied for the most popular subjects and their attainment at school was lower than whites'.

Mapstone noted that, in 2009, 29,000 white students got the requisite grades for Oxford (three As excluding general studies), compared to just 452 black students - although she didn't explain why Oxford then admitted so few of these seemingly perfect candidates.

US universities have increased diversity both in their student body and among their faculty, even in the face of threats of reverse discrimination suits by non-minorities. The universities felt that, if challenged, they could prevail in court by demonstrating the educational benefits that flow from a diverse student body and the societal benefits of increasing access. That Oxford and Cambridge are apparently ignoring these benefits is a disgrace.

Lammy told me: "It is OK for Oxbridge to be elite institutions; what's not OK is for them to be elitist institutions." The worry, naturally, is that a rise in fees will compound and entrench this bias. I suspect it might be a good idea for any black student who applies to Oxford or Cambridge with three or more top grades at A-level and is rejected to forward the correspondence to the Prime Minister.

Dr Mapstone, I suggest you make sure you have a good explanation for each and every rejection when Downing Street calls, along with a well-worked-out plan to make your student body more diverse. And soon.

David Blanchflower is professor of economics at Dartmouth College, New Hampshire, and the University of Stirling

David Blanchflower is economics editor of the New Statesman and professor of economics at Dartmouth College, New Hampshire

This article first appeared in the 20 December 2010 issue of the New Statesman, Christmas Special

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.