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6 July 2017

The facts are clear – Conservative university policy has failed

Jo Johnson wants Labour to look “at the facts” on higher education. Here are some for him to get on with.

By Angela Rayner

Theresa May’s Cabinet have had a busy weekend. From Boris Johnson to Justine Greening, they were pitching for their preferred policies to the Prime Minister – not in person, but via the front pages, and on issues ranging from school funding to the public sector pay cap.

Damian Green, the First Secretary of State – Deputy Prime Minister in all but name – chipped in the suggestion that we needed to have a national debate on tuition fees. Perhaps he missed the national debate on policies that we had very recently – the one that ended with his party losing their majority and their authority.

Still, they seem determined to have another one, within their own party at least. While Green was giving this speech, Jo Johnson, the universities minister, took to Twitter to defend the current system, and the record that it had on access and fairness. He even suggested, in response to comments made by Jeremy Corbyn, that “for some actual facts, see OFFA (the Office for Fair Access)”.

And, unusually, I think the minister might have a point. There are plenty of interesting facts we can get from OFFA, and other bodies.

For instance, figures from OFFA only a week ago told us that the number of disadvantaged pupils dropping out of university was at a five-year high. I’m sure the minister accidentally overlooked these “actual facts” when talking about his party’s record.

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Similarly, the minister forgot to mention the “actual fact” that since 2010, applications by part-time students and mature students have plummeted by more than 50 per cent.

And now new research from the independent Institute for Fiscal Studies has given us more “actual facts”.

For instance, students from the wealthiest 30 per cent of families will graduate with an average debt of £47,000, while those from the poorest 40 per cent have an average burden of £57,000. This change is driven almost entirely by the government’s decision to scrap maintenance grants and replace them with additional loans.

The debt burden, then, is deeply regressive, with the heaviest loads falling on those who need the most support – students from low- and middle-income families. The very people we most want to go on to higher education if we are serious about social mobility.

Perhaps Jo Johnson would argue that the system is still fair, because the repayments are progressive.

However, the IFS tells us a slightly different story, one that hinges on the changes made in 2012. In particular, the decision to freeze the income level at which graduates begin to repay their loans at £21,000, instead of increasing it in line with average earnings as the Coalition had originally promised, means that more and more graduates on low-to-middle incomes will be dragged into repaying graduate debt, despite not benefiting from a graduate pay premium.

In fact, the IFS concluded that “graduates from the bottom 30 per cent are no better off than they would have been had they faced the 2011 systems.”

So whenever Tories argue that their reforms made the system fairer, we will all know that the “actual facts” are rather different. Students from disadvantaged backgrounds will have the most debt, and then, being less likely than their affluent peers to go straight into high paying jobs, they will spend most of their working lives trying but failing to pay off that debt.

Finally, there are those who say that it is right that graduates pay for higher education, because they were the beneficiariesm – and it would be wrong to ask those on low incomes, who didn’t benefit from higher education, to foot the bill.

But what happens under the current system?

IFS figures show that around three-quarters of graduates will never fully repay their debts, and over 30 per cent of the loans will be written off by the government. These loans don’t just disappear, but instead the write-off adds to the deficit, meaning that in the long run, a substantial amount of the cost will still be met by the average taxpayer.

But the real issues around who pays and how much is paid for higher education are much bigger than that.

Those who defend the existing system act as if Labour’s plan will mean vastly increasing the total amount of government spending on tuition fees, but the reality is quite different. Even under the current system, the combination of astronomical interest rates and the existing debt being written off after 30 years will mean that all taxpayers, and not just the graduates who took out loans, will help foot the bill. 

While there is no doubt that some additional funding is necessary to deliver Labour’s plan, in the long term this amount is far lower than critics would suggest. In particular, the reality of the system means that the major issue is not simply how much the state pays for higher education, but rather who helps to fund it. Under the Conservatives’ plan, the burden is gradually shifting to lower-earning graduates, but under Labour’s reformed tax system it will be those with the broadest shoulders who help to fund an education system that will support the aspirations of individuals, and the needs of our businesses. 

For instance, while there is a lot of talk about whether or not tuition fees, or a fully-funded alternative, would be regressive, this has to be in the context of the overall tax system. If our tax system, as a whole, is progressive, then those with the broadest shoulders will make the greatest contribution, as it should be.

Labour’s fully costed manifesto pledged an end to tuition fees. Like all of our additional spending plans, the cost was funded by increasing taxes on those most able to pay: the highest earning 5 per cent, and large corporations. This was part of our effort to make the whole tax system more progressive, and to ensure that all public services, including education, were funded fairly.

To go back to the “actual facts” that the universities minister was so interested in, Labour’s plan will ensure every young person, whatever their background, can go on to higher education if they want to. We will help support the central aspiration of so many parents – to give their children more than they had themselves.

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