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30 May 2019

Theresa May bows out with a policy that exposes all her flaws

May's proposals on higher education are regressive and would involve a cut in higher education spending in the here and now.

By Stephen Bush

Philip Augar’s much-anticipated review into the higher education system and its future has been released. It’s a very meaty report with a great deal to recommend in it, including a proposal that maintenance grants be brought back for students from lower income backgrounds, but the headline-grabbing measure is the part that Theresa May has chosen to endorse: cutting the headline rate of tuition fees from £9,000 to £7,500 and lengthening the repayment term.

This reform is meant to solve two problems. The political problem is the popularity of Jeremy Corbyn’s fee abolition. The policy one is that most graduates will not pay off their fees and the rest will be written off by the taxpayer. The problem is that the way it does it represents a real-terms funding cut for universities in the here and now – because while the extra £1,500 is funny money, as students will never pay it back and it will ultimately have to be paid for by the government, in the present day, that isn’t Philip Hammond’s problem, which means that he doesn’t have to find the money in his budget.

(Doesn’t this indicate that the economics around budgetary rules and tuition fees are largely based on entirely subjective arguments about accounting? Yes!)

The problem is that this solution is regressive, because it means that the highest-earning graduates will pay less over the course of their careers, as they will pay the full £7,500 off and then be debt-free, while middle and low earning graduates will pay more than they do under the £9,000 system, and will in the here and now result in less money for higher education.  It also doesn’t fix the Corbyn problem because, surprise surprise, a £1,500 cut in fees is less popular than a £9,000 cut.

It’s impressive in a way, in that it is quite hard to identify changes to the current system of higher education funding that are both as unpopular and as unfair as this one, and yet Theresa May has managed it. To do it, May had to sack Justine Greening, an able and well-liked Education Secretary who managed both to open more free schools and academies than any other Secretary of State for Education and to be better-liked by the teaching profession than any other holder of the post since 2010; and to move Jo Johnson from a role he enjoyed at higher education to a role he disliked and would eventually quit, deepening May’s difficulties in passing a Brexit deal. And, of course, because May’s blunders elsewhere mean that she will not be Prime Minister much longer, the proposed reform isn’t even going to pass.

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The reality is, if you want to tackle the problems of higher education funding, you have three solutions. You can accept that the fee system as it currently exists is an income tax hike in disguise and just go for the real thing, increasing income tax on all people in order to pay for higher education without fees. You can increase the headline cost of tuition fees, decrease the interest rate and lower the payment window, so that the richest graduates pay the most while the lowest-paid graduates pay the most. Or you can just do away with the idea that individual graduates are paying for their own education and have a single, unending graduate tax.

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But everything else is just a waste of time and energy that serves only as a scale model of what was wrong with Theresa May.