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HE Finance after Hurricane Adonis

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By Rob Cuthbert

So there is to be a review of higher education finance. Probably. But it is still unclear whether it will be a ‘major’ review, whatever that means. It might only mean ‘major enough to see off the threat from Jeremy Corbyn’, but we await most of the detail.

After the June general election the apparent appeal to young people of the Labour Party pledge to abolish fees, and perhaps even write off student debt, sent the Conservative Party into panic mode. Of course it might not have been a pledge, nor even a promise, more an aspiration or a direction of travel. Students have heard that kind of thing before.

Storms were brewing, but no-one expected Hurricane Adonis. His summer spat with almost everyone in HE started on Twitter and moved to print and online media. It was appropriately summed up by one tweet which said that it was a pity that the valid points which Adonis had to make, for example about excessive VC salaries, were combined with so much rubbish. Speaking of which, UK2020, the right-wing think tank run by Conservative politician Owen Paterson, published a report on ‘The Universities Time Bomb’ by Richard Tice and Tariq Al-Humaidhi which was dismantled by Mike Ratcliffe (Oxford) on WonkHE on 4 September 2017.

As the silly season peaked, political and even business columnists turned to HE to fill their space. On 3 August Iain Martin wrote in The Times that the ‘University pressure cooker is about to blow: a war against tuition fees and overpaid vice-chancellors will break out this autumn unless ministers act now’. Luke Johnson wrote in the Business section of The Sunday Times that ‘Universities need to stop borrowing and spending beyond their means’. Former No 10 adviser Nick Timothy broke cover in The Telegraph: ‘Universities are not working, and we’re all paying. Higher Education has become an unsustainable Ponzi scheme in need of a radical shake-up.’  This showed a staggering lack of awareness of how the student loans and fees policy was supposed to work, despite the policy being repeatedly explained and consistently defended by Conservative HE Ministers David Willetts and Jo Johnson. But the genie was out of the bottle. For some journalists ‘research’ is reading what other journalists have written, so Dominic Lawson could write for The Daily Mail on 18 September 2017: ‘Why I despair of the universities fleecing students … the whole system increasingly resembles a Ponzi scheme, in which ever more students take on ever greater debts to the state which will never be recovered, because they will never earn enough to trigger the obligation to repay in full — or even in part.’ Yes, exactly as intended, to make HE spending rather less regressive than it always has been. It may not have been a very effective policy, but let’s at least criticise it for its failings rather than misrepresent its purpose.

The Student Loan Company fuelled the flames when it announced on 15 August 2017 that interest rates for student loans would not change from RPI plus 3%, a current rate of 6.1%. Clearly Jo Johnson had not been able to arrange any kind of political fudge to deflect the criticism these rates have attracted. The Independent’s Deputy Political Editor Rob Merrick underlined the political sensitivity of the issue in a story on 16 August 2017.

SRHE Vice-President Peter Scott (UCL IoE) wrote in The Guardian on 5 September 2017 that: ‘The game is surely now up with student tuition fees. The growing unhappiness about the rising burden of graduate debt, the Labour party’s pledge to abolish fees, which gained unexpected traction in the election, even the road-to-Damascus recantation by Andrew Adonis, originally an enthusiast for fees, have all made free higher education thinkable again. … The … defence – that fees are fairer, and therefore an attack on middle-class privilege – has been exposed as naive now that the downsides of a higher education “market” are becoming more apparent by the day. … There are two options. The first is to restore “free” higher education, funded by general taxation … The second is to introduce a graduate tax … The one clear message that came out of the election is that people are fed up with austerity – which hits the poor much harder. So ultimately there is no alternative – sorry! – to funding higher education through raising general taxation. And the only way to make this acceptable is to make the tax system fairer and more progressive.’

Alastair Jarvis, who replaced Nicola Dandridge as UUK chief executive after her move to the OfS, hit back against the summer sniping about universities, quoted in a Guardian article on 29 August 2017 by Richard Adams as saying: “Critics of British universities including Andrew Adonis are peddling “misinformation, muddled argument and even a little malicious intent”.

Jo Johnson’s speech on 7 September 2017 at the UUK Annual Conference suggested that he is trying to steer a difficult course between the irrelevant but populist idiocies of Adonis and the apparent success of the Labour appeal to younger voters at the 2017 general election. Verity Ryan reported for The Daily Telegraph on 12 September 2017 that Chancellor of the Exchequer Philip Hammond had said it is time for the Government to look again at tuition fees. He suggested some university courses should have lower fees because there was a “significant difference” between the job prospects of students graduating with different degrees. He too failed to understand that fee conformity is built into the regulatory system, not the consequence of a ‘cartel’. John Morgan reported for Times Higher Education on 12 September 2017 on an event at which former HE Minister David Willetts criticised the idea of forcing universities to lower their fees, saying that the “best and simplest system by far is £9k for everyone” and warning against judgements about “good” and “bad” universities. Andrew Adonis, the self-styled architect of tuition fees when introduced by Labour in 2006, said at the same event that he had “never wanted” to introduce fees, but his preferred options were ruled out by former prime minister Tony Blair.

Then came the Conservative Party Conference, when the Prime Minister’s speech indeed promised a ‘major review’ of HE finance. It appears there is still a gulf between No 10 and the Department for Education in terms of what ‘major’ will actually mean, as John Morgan reported for Times Higher Education on 4 October 2017, after attending a fringe meeting with Jo Johnson the day before. Mark Leach and David Kernohan of WonkHE were somewhere between optimistic and disbelieving in their own instant response on the same day. The most significant part of the statement was not freezing fees at £9250, but the raising of the salary threshold for repayment from £21000 to £25000. The policy is too complicated for most journalists to bother to understand, and it was left to Martin Lewis of Moneysaving to note and claim this as a partial victory, after his campaign for more fairness and greater public understanding. Chris Belfield, Jack Britton and Laurs van der Erve of the Institute for Fiscal Studies spelt out how the New higher loan repayment threshold is a big (and expensive) giveaway to graduates: ‘This apparently small technical change will save middle earning graduates a lot of money –  up to £15,700  over their lifetimes. It also represents a big shift in policy raising the long run cost to the taxpayer of providing higher education by around 40%, or over £2.3 billion a year in the long run.’ Nicholas Hellen and Sian Griffiths reported for The Sunday Times on 8 October 2017 that ‘Taxpayer bill for students soars’, citing an IFS report that said the taxpayer contribution towards tuition fees and living costs would now exceed the costs of the pre-2012 system.

It was clear that a simple application of the Labour Party ‘pledge’ on debt would be regressive. Jack Britton, Carl Emmerson and Laura van der Erve of the Institute for Fiscal Studies published their ‘Observations’ on How much would it really cost to write off student debt? on 14 September 2017: ‘what would be the impact on public debt of writing off fee loans accumulated under the £9,000 tuition fee regime?’ With all else held constant, the main beneficiaries of this proposal would be high earning graduates, with low earning graduates standing to benefit very little.’

Where, then, might a review take us? A Robbins-style review is out of the question: the mood is for contraction, not expansion. Ron Dearing is sorely needed at this point, but he would be far too sensible and measured to capture the mood of the times. Perhaps Browne II? Alas, it could be even worse: the downward trajectory of major HE reviews seems sure to continue. Andrew McGettigan anticipates a ‘shift to a system based on creditworthiness of institutions and borrowers’, noting that: ‘Imposing differential course funding admits that the original market reforms were misguided.’ He predicts there could be limits on the amount that the SLC is prepared to lend to different courses, which ‘won’t make HE funding less complex, but would sidestep issues around institutional autonomy and would allow institutions to seek alternative financing arrangements for their students (or move to a model seen in the US where high sticker prices are only paid by some, who fund fee waivers for others).’

The collateral damage will probably include the demise of the Teaching Excellence Framework, sold to institutions on the basis that it would be the only way to achieve future fee increases. Watch out for prestigious universities with bronze or silver ratings leaving the sinking TEF ship. David Willetts says we are likely to see the return of a cap on student numbers, which might have to be realised indirectly through course-specific caps on the lending by the SLC, rather than directly via the Office for Students. As always, the greatest damage will come at the sharp end of the ‘market’: the institutions that do most to broaden access to HE will suffer the most. Some might even be forced out of business, satisfying the wishes of those elitists with rose-tinted memories of their own very different university experience, who still argue the case for intermediate level technical education and restoring the polytechnics to their lower esteem – for other people’s children, of course, as Alison Wolf has pointed out.

With rumours of Cabinet changes there might be more delay before we discover what kind of review is in prospect. HE finance has become too complicated to survive superficial public scrutiny, as the summer’s headlines have demonstrated. Jo Johnson has sturdily defended the better (progressive) aspects of current policy, but it is probably too much to hope that he can survive another Ministerial reshuffle – he has at times appeared to be the last grown-up at the politicians’ table in the HE policy room. And the summer has also shown us that after a hurricane, the clear-up is usually very expensive and takes a very long time.

Rob Cuthbert is Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner, Practical Academics

Author: SRHE News Blog

An international learned society, concerned with supporting research and researchers into Higher Education

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