Yet More on Student Unrest in the U.K. Over the Attack on Higher Education Funding

Philosopher Gordon Finlayson (Sussex) writes:

I don't know if you have noticed this in the US, but there is widespread political action and civil disobedience, including occupations and flash demonstrations, being taken by students and school pupils all over England (mainly protesting at the tripling of Student Fees). This action taken by a young, technologically savvy and apparently newly politicised generation is being quite effective, and is creating some serious political instability. It will be interesting to see what happens in the run up to the vote on University funding on December 9th.

This action is part of a wider outrage at the austerity measures and slashing of public services by a Government that simultaneously gives huge tax waivers to its own rich advisors: Andy Halford (vodafone) and Phillip Green (Topshop).  Vodaphone and Topshop are being targeted by protesters angry at the Governmnet sanctioned tax avoidance of these companies. A Winter of Discontent is on its way.

The rather sanguine discussion of Browne's report on your blog that I have read so far, has underestimated the explosive nature of the policy change that is about to be implemented in Higher Education, how widely it is resented by parents puils and students, just as it has ignored the wider context of current political unrest. I have never seen anything like this, since the miner's strike and the Poll Tax under Thatcher.

More thoughts and links from U.K. readers welcome in the comments.

Comments

[Ian Rumfitt]

It will indeed be an interesting week. Some of the best informed commentary is to be found on William Cullerne Bown's 'Exquisite life' site. But, as his latest post admits, even he is in the dark about what is going on within the parliamentary Liberal party. On paper, the Coalition has a large enough majority in the Commons for it to be relaxed about a few Liberal MPs voting against the proposal. But the blind panic of the Liberal leadership (the responsible Cabinet minister seems to flip-flop by the hour over whether he will vote for his own department's proposal) suggests that the rebellion is larger (or at least deeper) than it seems, and may threaten the Coalition.

Even if Thursday's motion is passed, that will not be the end of the matter. The fact that the devolved administrations in Edinburgh and Cardiff have taken very different approaches to the funding of their universities will be a persistent source of instability. If the Coalition's proposals are adopted, then two students from the same school in the Welsh marches, who progress to read for the same degree at (say) Cardiff University, and whose parents have the same income, will be charged radically different tuition fees depending on which side of the border the parental home happens to lie: ca. £3300 p.a. if it is in Wales, as much as £9000 p.a. if it is in England. When this consequence of devolution is pointed out, middle-class English people (who think of their taxes as subventing public expenditure in Scotland and Wales) tend to be annoyed to the point of outrage. For this reason among others, I fear we remain some distance from attaining the generally accepted and sustainable funding settlement that the UK universities badly need.

[Mike Otsuka]

“The rather sanguine discussion of Browne’s report on your blog ... has ignored the wider context of current political unrest. I have never seen anything like this, since the miner's strike and the Poll Tax under Thatcher.”

The miner’s strike and the protests against the Poll Tax were responses to attacks on the working class and the poor. The protest against the rise in tuition fees is a response to measures that will make only those who go to university and end up earning above the median income worse off.

What’s striking is how little protest there is, this time around, as compared to under Thatcher, against various measures that hurt the least well off.

The wider context is that there isn’t (yet) much progressive wider context to the protests against tuition fees.

See this column by Polly Toynbee:

http://www.guardian.co.uk/commentisfree/2010/nov/05/students-low-pain-pecking-order

That having been said, middle class anger might end up being sufficiently explosive to cause the Liberal Democrats to back down from one of the few cutbacks of the coalition government that hurt the better off rather than the worse off.

(And, by the way, students from Wales will have any increases in their tuition fees subsidized by the Welsh government even if they go to study at a university in England. That will further inflame Middle England.)

[Gregory Lewis]

As a note, Cambridge students have occupied the University common room for about a week now, ditto many other top-flight universities (UCL is another). Academics are joining the students in their protests - an attempt by University management and police in Cambridge to expel students was in part repulsed by a crowd of academics showing up, and a few hundred have signed a petition in support. Whether students and faculty will combine arms to lobby against the Browne review remains to be seen.

Rumfitt is right to point out how angry people are about the education reforms, as well as the inequalities surrounding devolved power. The main issue is the Liberal democrats (the junior partner in this coalition) have supported these measures, despite pledging to vote against any such fee increases in the election, and despite the vast numbers of students who voted for them.

Unsurprisingly, students are incandescent with rage at them (especially as newspaper reports reveal that the Lib Dems had planned to 'dump' these promises in the event of coalition deal horse-trading before the election had even begun) and I suspect the Lib Dems are worried that supporting this bill will make them utterly unelectable in 4 or so years time.

[Mike Otsuka]

PS to my above comment: Polly Toynbee writes, in the piece to which I linked, that, after the increase in tuition fees, "[t]hose who earn least will be paying back £15 a week for 30 years while earning well below the £24,000 median salary".

This isn't right.

First of all, the median income among taxpayers, for the most recent year (2007-08) for which there's government data, is £18,500, not £24,000. See here:

http://www.hmrc.gov.uk/stats/income_distribution/3-1table-jan2010.pdf

But, under the government's proposal, nobody pays anything back on any income below £21,000.

Toynbee's £24,000 figure is probably that of the median income of those who are in fulltime employment. But even if we take that figure as the median income, even someone who earns £24,000 would pay back only £5.20 per week (calculated as 9% of income over £21,000). So it couldn't be that someone who earns well below this amount will be paying back £15 a week.

[Chris Bertram]

Mike Otsuka writes:

"The protest against the rise in tuition fees is a response to measures that will make only those who go to university and end up earning above the median income worse off."

This is only plausible on the assumption that the threshold will be raised by future British governments to reflect changes in the median income, I don't know why Mike feels confident about that. Even if Mike were correct about that, the changes amount to an extension of the commodification of higher education, something deplorable independently of the shape of the distributive impact.

[Neil Sinclair]

Mike Otsuka writes:

"The protest against the rise in tuition fees is a response to measures that will make only those who go to university and end up earning above the median income worse off."

There is another constituency who might be made worse off by these proposals: those put off from going to University altogether, afraid of taking on more that £30,000 worth of debt; many of these may be 'working class' and 'poor'. It is therefore inaccurate to suggest that only those who end up earning above median income will be affected.

[Chris Bertram]

A further point in response to Mike Otsuka's first comment. It is true that there has, so far, been more protest against those cuts that will harm the middle class rather than the poor and working class. The right response to that isn't to deplore these protests compared to imaginary ones that aren't happening, but rather to extend these protests into a wider defence of the welfare state against the coalition's attacks on it. In other words NOT: "why are you doing this? There are worse things in the world", BUT "It is great that you are doing this, and here's some further and worse injustice that ought to exercise you." I'm sure that there is considerable overlap in personnel between the student protestors over fees and the UKunkut campaigners against rich tax avoidance already. t is these people who are actually opposing the coalition's plans rather than the supine parliamentary Labour party.

[David Mathers]

Its worth remembering that some of the schools students who are protesting (as supposed to the university students) are protesting against the removal of Educational Maintainance Allowance, a small weekly amount of money paid to students from less well off families to stay in school past the age of 16. So its not quite true to say that the protests are purely against stuff that will hurt only the better off.

[Robert Knox]

It is something of a mistake to think of this as being purely a 'middle class' protest, for two quite obvious reasons. Firstly, a key component of the recent movement has been defence of the EMA (Education Maintenance Allowance), a means tested education benefit for some of the poorer students in the country. If one actually looks at the protests and actions some of the most militant elements have in fact been 6th form students seeking to defend EMA from the more general attacks on education.

Secondly, a key priority of many elements within the movement has been the attempt to link the narrative of education cuts to attacks on (what remains of) the welfare state more generally. Even at the first big 'official' demonstration, the Deputy General Secretary of the TUC was calling for a worker student alliance. There have also been various solidarity calls between trade unions (UNITE and RMT being the most prominent). Indeed, one of the key things that came out of the recent storming of Lewisham counil was that ordinary people had been particularly 'inspried' by the students.

It is also rather obviously the case that students, and the student organisations have been a central part of the numerous anti-cuts movements and campaigns that have sprung up in Britain, and have extended to the criticism of cuts more generally. Polly Toynbee's article is actually pretty pernicious in that it seems hellbent on splitting the movement against cuts before it has even begun. She also seems to have been - frankly - somewhat hypnotised by the rhteroic of 'progressive'-ness that has been co-opted by the Coalition. In this vision, to be a progressive is not about fighting for a substantive politics organised around human need, but is simply an appendage to any other political vision which makes 'people pay for what they get' and the 'rich' pay more. It's worth noting of course that she makes a complete turnaround on the issue of student protests here - http://www.guardian.co.uk/commentisfree/2010/nov/26/student-protest-public-sector-cuts.

[Foad Dizadji-Bahmani]

As a further note (following Gregory Lewis), LSE students have occupied a room too. (The Vera Anstey Suite, which is usually used as a meeting room and not for teaching.)

A statement of demands can be found on their blog:

http://lseoccupation2010.blogspot.com/p/public-statement-and-demands.html

[Ian Rumfitt]

Ad Mike:

Under the government's proposal, nobody pays back anything on any income below £21,000 *at 2016 prices*. (Cable's statements apparently to the contrary have been 'clarified' by BIS civil servants.) So how generous this aspect of the scheme is depends on the rate of inflation over the next five years.

The independent, and widely respected, Institute of Fiscal Studies is due to publish its assessment of the impact of the proposals on various income groups on Wednesday, the day before the HoC vote. I expect it will make for interesting reading.

[SeanH]

The miner’s strike and the protests against the Poll Tax were responses to attacks on the working class and the poor. The protest against the rise in tuition fees is a response to measures that will make only those who go to university and end up earning above the median income worse off.

The media has focussed on the tuition fee rise, but the elimination of EMA (Education Maintenance Allowance, a weekly cash benefit for pupils from lower-income families who remain in school after 16) is also being protested by the same people, and on the same marches, occupations etc. I also disagree that protesting the tuition fee rise is a middle-class protest - every other protester I have met emphasises the degree to which the fee rises will put off people from poorer backgrounds, a fear which is confirmed by polling.

[Mike Otsuka]

I now see that the £21,000 repayment threshold won't be adjusted for inflation between now and 2016, which is the first year in which students whose fees have increased under the new system will be liable to repay. The earliest this threshold will be adjusted upward for inflation is 2021. Median taxpayer income will, however, surely rise above £21,000 between now and 2021 -- perhaps considerably above. So people earning the median income will surely end up paying 9% of a portion of their income under the new system. Since, however, students are, under the current system introduced by the Labour government, liable to pay 9% of their income over £15,000, someone who does not earn above the median income is still likely to be better off under the new system than under the current system. (Likely but not certain, since this depends on how quickly the much smaller loans under the current system would be paid off, which depends on how much above the new repayment threshold the median income rises.)

[John Protevi]

Following up on Chris Bertram's remarks ("Even if Mike were correct about that, the changes amount to an extension of the commodification of higher education, something deplorable independently of the shape of the distributive impact"):

The details of the case don't matter as much as the political economy principles. Making an every man for himself game more fair still leaves it an every man for himself game. It's the atomizing nature of the proposals to which we should object. Focusing on the exact payoff point risks missing the forest for the trees.

Or to put it in Twitter-speak: "Sauve qui peut" is no way to run a society, big or otherwise.

[Chris Bertram]

Well Mike, let's see what the IFS have to say. Even if the effect is broadly neutral, there's still the matter that many students will be paying up to three times more for education whilst universities have less money to educate them with. This is certain to result in acute tensions, as those we teach (now cast in the role of "customers" in a fully commodified relationship) will expect to get more and better, commensurate with the extra they are paying, whilst we the producers have less than we currently have to meet those expectations. Given the way that British university adminstrators will react (herd-like) to these funding changes, I think that we can also confidently predict a proliferation of "business studies" courses in the post-92 institutions and a contraction of provision of arts and humanities subjects. There will be fewer philosophy places, worse staff-student ratios in philosophy departments, fewer new jobs and some redundancies. (Perhaps Russell Group institutions such as UCL and Bristol won't be hit as hard as our colleagues will be elsewhere.)

[Mike Otsuka]

Since comments are posted in clusters, I didn't have a chance to read the comments from December 5 posted above my 7:45 am comment before I posted that one. Here are some reactions to those comments:

I acknowledge that, in addition to those who end up paying more to go to university, those who are deterred from going to university by higher tuition fees will be harmed. Those deterred will disproportionately be from poorer backgrounds, and this is a serious problem. The solution, however, is not to abandon the proposed rise in tuition fees for everyone, including those from relatively privileged backgrounds, which is what (among other things) those who are taking to the streets and occupying university buildings are calling for. Rather, the solution is tuition waivers and an increase in maintenance grants for those from poorer backgrounds. The government has taken some modest steps in that direction, but it should do much more.

Re Chris Bertram's suggestion that my reaction to those who are protesting the tuition hike should instead be: "It is great that you are doing this, and here's some further and worse injustice that ought to exercise you." I don't agree with him that it would be great for the government to abandon a rise in tuition fees up to £9,000 for everyone, including those from relatively privileged backgrounds, who would have to begin to repay these fees only once a reasonably high income threshold is exceeded. Although I take it on the authority of the likes of Paul Krugman and Joseph Stiglitz that the government's austerity measures are ideologically driven and economically counterproductive, I don't think the amount that the government can borrow, or raise through higher taxes, is so limitless that, in addition to significantly increasing, as opposed to cutting back on, spending that addresses serious injustice, it can also afford to continue to subsidize the university education of the middle class (and above) at current levels.

[Richard Rowland]

RE Neil's post:

Quite right, it’s wildly optimistic to think that we will maintain anything close to the diversity of social background in the undergraduate student population that we now have if fees are £9,000 per year.

Already, many people don’t go to university because they don’t like the idea of incurring the large debt that three years of fees of over £3,000 per year and a maintenance loan lands you with, and the same goes for many graduates who are put off taking Masters courses.

This will get much, much worse when the prospective debt is £27,000 or more for fees and £11-19,000 or so on top for maintenance, varying depending on whether you’re able to live at home and attend university and where you’re attending. If you’re 17 from a working class or lower middle class background (at least) this will seem like a horrific amount of debt to get yourself into, regardless of how much you’re going to have to earn before paying it back. £46,000 of debt + interest seems a lot to get yourself into for three years of university in London—especially if, like many Arts and Humanities students, the jobs you’re hoping to be in with a chance at getting after taking a degree want, not only a degree, but also years of unpaid internships before they’ll consider you.

[Iain Brassington]

Hi -
Just a quickie to mention the occupation of the Roscoe lecture theatre at Manchester University: the blog is at http://roscoeoccupation.wordpress.com/
Cheers

[Chris Bertram]

Mike wrote:

"I don't think the amount that the government can borrow, or raise through higher taxes, is **so limitless** [emphasis added] that, in addition to significantly increasing, as opposed to cutting back on, spending that addresses serious injustice, it can also afford to continue to subsidize the university education of the middle class (and above) at current levels."

In fact the government could raise a great deal of additional money through taxation on higher income earners and the super-rich, but chooses not to do so, it also tolerated a great deal of corporate tax dodging. The UK government also spends vast amounts on its military. Total spending on HE in the UK as proportion of GDP is *lower* than than in many comparable OECD countries. (And all of these figures are dwarfed by total spending on the bailout of the financial sector.) So much for "so limitless"!

If the British government were engaged in significant increased in public spending that addresses serious injustice (Mike's interesting hypothetical) and, *in that context*, downgraded its commitment to HE that would be one thing. But we don't live in that alternative possible world. We live in an actual one where the existing government is reducing spending across the board.

[Jonathan Webber]

Chris Bertram is right to predict a reduction in student places in arts and humanities as a result of this proposal. Here is the evidence:

For those who don’t know this: in the UK, all undergraduate admissions are filtered through a central service, called UCAS.

UCAS release statistics every couple of months. Last week’s release of statistics on applications for 2011 entry compared to those for 2010 entry by the same time last year makes for very interesting reading.

There is an overall increase in student applications of 13.6%. More on that shortly.

How is that 13.6% distributed? UCAS gives figures for groups of disciplines. Here are some of them (all are increases):

Subjects allied to medicine: 31.8%
Technologies: 20%
Mass Communications and Documentation: 27.5%
Creative Arts and Design: 19.6%
Education: 28.9%

Historical and Philosophical Studies: 5.5%
Linguistics, Classics, and related: 1%
European Languages, Literature, and related: 3.5%
Non-European Languages and related: 4.0%
Medicine and Dentistry: 3.4%

There is a clear shift towards degrees widely perceived (especially among applicants whose parents did not attend university) as more vocational. Arts and humanities are faring much less well. Ditto medicine and dentistry, perhaps because these degrees take much longer.

You might be thinking: but it is still all an increase! What’s the problem?

If this disproportionate distribution is indeed due to the prospect of paying higher fees from September 2012 onwards (these are applications to start degrees in September 2011), then the following phenomenon is probably also occurring:

– over the past couple of decades, increasing numbers of students have been taking a ‘gap year’ before beginning their degrees; indeed, there is a veritable ‘gap year’ industry catering for this;

– since fees begin in 2012, taking 2011-12 as a ‘gap year’ will be a hell of a lot more expensive than any previous (or indeed subsequent) gap year;

– if you are taking a gap year, it makes sense to apply to university after you have got your A-Level results from school (i.e. apply during the gap year).

If this is right, much of the overall 13.6% increase could be accounted for by people applying now who would, had it not been for the prospect of the fee hike, have been applying next year during their gap year (which they now will not take).

If that is right, the 5.5% ‘increase’ in History and Philosophy looks like it could well be a real terms decrease.

And this is before it is known whether the fee hike is certainly happening. or what it will actually look like across the sector if it does happen.

I think everyone in the arts and humanities in the UK ought to be really rather worried by this.

(As indeed should the ‘gap year’ industry.)

[Mike Otsuka]

Chris writes,

"If the British government were engaged in significant increase in public spending that addresses serious injustice (Mike's interesting hypothetical) and, *in that context*, downgraded its commitment to HE that would be one thing. But we don't live in that alternative possible world. We live in an actual one where the existing government is reducing spending across the board."

But I assume, Chris, that you would agree we me that the British government ought to significantly increase, rather than slash, public spending that addresses serious injustice and that IF it can't afford both to do that and to fund universities at current or higher levels, it ought to do the former before it does the latter.

We disagree as to whether the government can afford to do both.

You appear to think that the government can do both by engaging in what I'll call "Chris's interesting hypothetical": namely, raising and enforcing taxes on the rich and corporations and slashing military spending.

But you also maintain that such money raised or saved would be "dwarfed by total spending on the bailout of the financial sector".

If, however, it would be dwarfed by that spending, then such money raised or saved would not even be adequate to cover the borrowing needed to finance the bailout.

So where, then, does the additional money come from, without running up against the limits to taxation and borrowing that capital flight and bond markets impose, to cover significant increases in, rather than the current reduction of, public spending to address social injustice? These increases would need to be massive in order simply to provide the poor, elderly, and disabled with decent housing, income support, and social services, and children throughout the UK with a good primary and secondary education.

And now how much extra taxation or borrowing is on tap, on top of this, for universities?

[Steph A]

And another quick mention for the occupation at King's College: http://kcloccupation1.blogspot.com/

In addition to the occupations at SOAS, LSE and Cardiff. And I expect more anarchy to unfold in London this week with the 'Tuition Fee Vote: Shut down London!' event scheduled for the 12th:
http://www.facebook.com/event.php?eid=136567579732280

[Chris Bertram]

Mike, you seem to want to address these issues by placing yourself in the position of a benign government accepting as a given the hard political constraint "that capital flight and bond markets impose." It is an interesting counterfactual, but we don't have that benign government. We do, however have a small chance of imposing some political constraints on the actual (non-benign) government, by building an effective movement against the cuts they want to impose on welfare spending. That, I suggest, is a better starting point.

[David Wallace]

In defence of Mike Otuska's basic line:

Just as a matter of accounting, the UK higher education sector has to be paid for - whether (a) by shrinking it down to something more affordable a la the 1960s framework, or keeping it at about its current size, and (b) charging students in arrears along the lines of the Browne report, or (c) by paying for it out of general taxation.

I find (a) very unattractive: the education framework of the 1960s was horribly regressive and looked after the interests of a tiny elite. My anecdotal impression is that - for all that there are occasional "mickey-mouse degrees", most people in UK higher education are enriched intellectually by, and benefit economically from, their education, and I think it would be very unfortunate to go back to the 1960s status quo.

It's extremely difficult to arrange matters so that (c) is more progressive than (b). Theoretically, a seriously progressive taxation rate could do it, but it has to be *seriously* progressive given that students would in any case pay much more under (b), in real terms, if they earned a higher salary, and so (b) has progressivity built in. Insofar as politics is the art of the possible, I think we have to recognise that taxation that radical isn't on the table. (And given that it isn't, the issue of how much the government spends on - e.g. - defence is neither here nor there. Suppose we abolished national defence entirely. What is the case for not using the money for a sub-median-wage tax cut rather than to subsidise higher education? If the defence budget were to be transferred en bloc to HE, it would be a pretty dramatic transfer from the poor to the rich.)

Over and above that, from the university point of view the virtue of (b) is that we (i.e., universities) have relevantly more control over our finances than if the government just decided how much to give us. I accept that the value of this varies from university to university, and I know Oxford's situation well, the rest of the sector far less well, but certainly for Oxford, it's a blessing in the longer term to be able to say that tutorial teaching is worth it and that therefore we'll set out to persuade people to pay for it themselves, rather than trying to persuade the government to pay for it.

Ultimately, and pace Robert Knox's criticism, I'm very much in agreement with Polly Toynbee here. 90% of this government's policy programme is unpleasantly regressive and harmful to the interests of the least well off. It's depressing that the focus of hostility to it has been on the 10% that I don't think has that character.

As a postscript, I'd add that - whatever the merits of opposition to fees - one should be cautious in attributing to undergraduate protesters an understanding of those merits. My experience in discussing tuition fees with undergraduate opponents of the Browne proposals is that (not universally, but as a general rule) they have a quite limited appreciation of the overall financial problem that is university funding.

[John Protevi]

In addition to the short-term movement against cuts in public service spending, we could also fight long-term against "capital flight and bond markets" by working for a Tobin Tax or similar mechanisms: http://www.ceedweb.org/iirp/.

After all, it's not as if "capital flight and bond markets" are laws of nature to which we must helplessly adjust; they are historical constructs against whose current form and bad effects we can and should struggle.

[Mike Otsuka]

If, Chris, you want to build an effective movement against welfare cuts on the energy and anger of students, then you had better hope that the government's tripling of tuition fees goes through on Thursday, since, if the government is defeated, that anger will dissipate and student protests and occupations will fizzle out.

[Brian]

I'm pretty confident that Mike Otsuka does not think that flight of capital is a law of nature and that he agrees it is a particular historical phenomenon. Actually, I'm hopeful no one is confused about this issue. But historically particular phenomena can be quite sticky, which is what prompts, I suspect, Mike's questions.

[Matthew Kramer]

I want to register my agreement with Mike Otsuka and David Wallace. What is regrettable is that the ceiling on fees is not being placed much higher; if the ceiling were raised, the level of family income entitling a student to exemption from the fees could also be considerably higher.

[Chris Bertram]

Re David Wallace's "(b)" and the claim that "we (i.e., universities) have relevantly more control over our finances than if the government just decided how much to give us." This is, of course, false under the existing proposals, since the amount that universities can charge is capped by the government at a level where universities will (probably and for the most part) have less income than under the current system and home student numbers are also, for the time being at least, also fixed. So the government is still controlling how much we get, it just isn't supplying that amount from general taxation.

[Robert Stevens]

(i) The Vodaphone story is claptrap. Vodaphone have not been 'let off' £6bn as Private Eye report. Her Majesty's Revenue and Customs have repeatedly stated that this is an urban myth.

(ii) The Phillip Green story is more complex. He transferred shares to his wife, who has in turn relocated to Monaco. That means that no UK tax will now be paid on dividends she receives. Immoral, I think so. Illegal or government sanctioned? No.

(iii) The government (following Liberal Democrat policy) has announced considerable measures to crack down on tax avoidance by moving offshore: see here
http://www.guardian.co.uk/politics/2010/nov/13/offshore-tax-evasion-crackdown-billions

(iv) There are alternatives. We could, for example, put up VAT (Sales Tax) by 2 and 1/2 pence and raise equivalent sums to the funding students will have to provide out of (interest free) loans. Unfortunately, the bigger picture is that the UK is currently running a deficit at around 12%. That has to be closed somehow. Arguing, as Gordon Finlayson seems to do above, that there is no problem because there is a magic money tree from which we can pay for this is unhelpful. Free-lunch-ism of the worst kind.

(v) Calling for HE to be funded properly out of general taxation is crying for the moon. We struggled on for decades on that basis. The result was the near destruction of great chunks of UK Higher Education. No party of any stripe has this as its policy. The world we find ourselves in is not one where governments place a high value on higher education.

[Thom Brooks]

There is a further proposal that has not been mentioned yet. The Universities Minister, David Willetts, has said that the full rate of £9000 per year in fees would be permitted where certain conditions are met. One condition he has proposed is the introduction of a 2 year BA programme. At present, a BA at a typical English university takes 3 years. The idea is that the long summer, winter, etc breaks would go as more was crammed in. I would suspect much opposition from colleagues if this proposal were to be passed.

Students are also occupying a building at Newcastle University. Their blog is here: http://ncluniocc.blogspot.com/

[David Wallace]

Responding to Chris Bertram: granted of course that the government proposal gives us much less control over our finances than a genuinely free market (not that I'd support the latter). But it is the case that universities get to choose whether to set fees at £6,000 p/a or £9,000 p/a. So some universities will get more teaching money than others, and the decision is not made at central-government level: it's made at university level, based on what you think your students will pay for.

[Nicholas Vrousalis]

Mike's comments -and his responses to Chris- are, I think, wholly unjustified. I find them both naive with respect to present UK circumstance and normatively unsound.

Mike says:

The solution, however, is not to abandon the proposed rise in tuition fees for everyone, including those from relatively privileged backgrounds, which is what (among other things) those who are taking to the streets and occupying university buildings are calling for. Rather, the solution is tuition waivers and an increase in maintenance grants for those from poorer backgrounds.

Even if you think that it is permissible to charge for education (I do not) this is all horrible patchwork. For one, as Chris points out, the Tories have no intention to do what Mike says they ought to do. More importantly, if inequalities in education result from pre-education priviledge, then surely you must strive to eradicate priviledge, not charge for education.

Mike adds:

I take it on the authority of the likes of Paul Krugman and Joseph Stiglitz that the government's austerity measures are ideologically driven

Do we really need Paul Krugman or Joseph Stiglitz to tell us that? The Tories have long wanted to destroy public tertiary education in the UK: hic Rhodus, hic salta.

I don't think the amount that the government can borrow, or raise through higher taxes, is so limitless that, in addition to significantly increasing, as opposed to cutting back on, spending that addresses serious injustice, it can also afford to continue to subsidize the university education of the middle class

The UK's university budget is, if I'm not mistaken, around £7bn. I don't mean to point out the obvious, but -military expenditure aside- UK banks have received over £1tn over the past two years. They may yet need another bailout. This is the financial equivalent of having the laziest man in the neighbourhood borrowing your money, and then demanding your furniture. Given the social and political role universities have -arguably more important than that of private banks- this discrepancy in our readiness to meet the needs of one, but not the other, is striking, to say the least.

So let's not make things more complicated than they are: as academics we must speak out. In this case we ought to speak out -with those demonstrating- against unfair and counterproductive reforms.

[Robert Stevens]

"The UK's university budget is, if I'm not mistaken, around £7bn. I don't mean to point out the obvious, but -military expenditure aside- UK banks have received over £1tn over the past two years. They may yet need another bailout. This is the financial equivalent of having the laziest man in the neighbourhood borrowing your money, and then demanding your furniture. Given the social and political role universities have -arguably more important than that of private banks- this discrepancy in our readiness to meet the needs of one, but not the other, is striking, to say the least."

This is not comparing like with like. There is a difference between a capital expenditure and an ongoing cost. If I spend $100 heating my house I no longer have $100. If I spend $2m on a Picasso, I no longer have $2m but I do have a new asset with a re-sale value of $2m. Similarly, money spent on bank shares is not simply lost.

Now, it might be that, as the New Economic Forum tried to argue, the money spent by the government re-capitalising the banks will not be recovered, but looking at the share prices of the banks and the profits currently being made that looks unlikely.

Barclays, for example, were re-capitalised with an investment from Abu Dhabi, not UK government funds. Abu Dhabi subsequently re-sold their stake at profit of around $3bn.

There are many vulnerable people who will be adversely affected by the current cuts. The disabled and those dependent upon housing benefit look to be particulrly hard hit. Students protest the loudest, but, given their future earning power and the profile of their backgrounds, they don't seem to me to be unarguably the most deserving group for State largesse.

[Foad Dizadji-Bahmani]

It seems to me that even if (intended neutrally) one is persuaded that there should be a rise in tuition fees along the lines suggested by Mike (if I may) - as per "[t]he solution, however, is not to abandon the proposed rise in tuition fees for everyone, including those from relatively privileged backgrounds, which is what (among other things) those who are taking to the streets and occupying university buildings are calling for. Rather, the solution is tuition waivers and an increase in maintenance grants for those from poorer backgrounds." - one should still oppose the bill being voted for on Thursday (and support the protests in that vain) because that bill makes no provisions for such 'balancing'. That is, surely one would not want to pass the bill without including in it details of how the (potentially) negative effects detailed here (and elsewhere) would be allayed?

The Government has outlined a waiver for some students from poorer backgrounds, in a seeming partial concession. But (and I don't argue for this but just state it) the details of the proposal are far from satisfactory, it seems to me.

The important point is this: the Government is trying to rush the bill through, as the new* proposal to waive some fees also shows, and this should be opposed. I am genuinely open-minded about the rise in tuition fees but this needs further detailed debate. As such, I think that this bill should be opposed by both sides of the "pro/anti tuition fee rise" divide.

(* As I understand it the money from this is not "new" in that it is to come from the already established budget of the "National Scholarship Programme".)

[David Wallace]

Responding to Nicholas Vrousalis:

(1) It's not clear to me that the current government won't set up (or can't be pressured into setting up) some moderately progressive pattern of support for those from poorer backgrounds. We have a coalition government, one part of which is under pretty intense pressure over student fees. It's also the case that the existing framework, with its income-contingent payback framework, is already moderately progressive.

(2) Nicholas writes, "if inequalities in education result from pre-education privilege, then surely you must strive to eradicate privilege, not charge for education". By all means strive to eradicate privilege (insofar as I know what that means in this context), but expect it to take decades. Do we really have to go on subsidising the already-privileged in the meantime?

(3) I'm not sure what the parameters are for the impermissibility of charging for education. Does this apply to MBAs? To second degrees? If it applies to any form of education whatsoever, it's fairly obviously unaffordable. If it applies to some forms and not others, it starts to sound less like a principle, more like a cost/benefit analysis. And then things are, unavoidably, complicated. (Let's by all means not make things more complicated than they are; let's not over-simplify them either.)

(4) The bank bailout will not end up costing taxpayers anything like 1 tn. (The last estimate I saw was in the low tens of billions). But in any case, defensible positions on the bailout are (i) it was unnecessary, and banks shouldn't have been bailed out; (ii) it was necessary, because otherwise the whole financial and economic system would have collapsed. Those of us who think (ii) (which is close to a consensus position in economics, as I understand it and for what it's worth) aren't going to be much moved by comparisons of that one-off piece of emergency spending with the year-on-year continuing cost of the HE sector.

[Chris Bertram]

David Wallace: it is not correct to say that universities "get to choose" whether to set fees above £6k. As Thom Brooks points out, it is the goverment that will grant permission to do this, provided universities agree to jump through some as-yet unspecified hoops concerning widening access.

[Grahame Lock]

The situation in Britain is far worse than a look at the funding cuts alone (which are awful enough) would suggest. The Stefan Collini piece variously referred to on this blog adduces one reason: that the fees and loans reform is in fact, more profoundly, about the imposition on the academy of a (supposed) consumerist and (fake) free market ideology (you know the kind of stuff), which stands in opposition to the very raison d'etre of the universities (or of a true university). I think the best word - I am not the first to suggest it - for this reform is nihilist.
All this is naturally not a new phenomenon, but is now being accelerated. David Ganz for example writes: "Browne is profoundly and tragically philistine: its blind faith in the market is ludicrous .... To reduce Browne to a scheme for university funding is to whitewash its ideology." And: "To call [this ideology] 'liberal' beggars belief: it is premised on a market model remote from reality, and it treats universities as a means to raise the earning power of students, nothing more."
The contents of the reform reflect an even deeper reality: that (simplifying greatly) the political and business classes have themselves fallen vertiginously into philistinism. Whereas these classes used eclectically to combine economic liberalism with a devotion to the intrinsic value of other pursuits and ways of life - art, literature, academic work and so on - this second element is now being tendentially eliminated. All is economics; all is profit; each human individual is a little entrepreneur (except for those few who are big entrepreneurs); every field of human activity must contribute to the gross national product, via individual enrichment (that is the fairy tale) - or it is has no value. There is no value but quantifiable economic value. And so on. This is a familiar and dreary story. Unfortunately it is the main story in town.
To start doing sums and on that basis - buying into this economistic ideology - to assert that only (individuals in the) the middle class will suffer, is fundamentally misleading. It is somewhat like arguing that the abolition of the great symphony orchestras would only affect their musicians and the small, mostly middle-class section (less than 1%) of the population that listens to them. Their abolition might indeed, to use that presently fashionable term, be only "fair" to the disadvantaged... This is radical but dismal anti-perfectionism. (The university and higher education reform is of course - pace Polly Toynbee, who I was surprised to see linked to above - different and easily distinguishable from matters of restricted life-chances for the disadvantaged, bonuses for company directors or cuts in housing benefits and the like, and does a quite different kind of damage. Michael Otsuka seems to think that the universities issue is all about "injustice". Some contributors tried to correct him, but to no avail. There are other things than justice - like symphony orchestras and scholarship.)
There is some apparently serious "accounting" going on in the contributions above, suggesting we have to admit that it is as food as impossible to fund university teaching in the old way, through general taxation. These "hard-headed" calculations do of course run up against the difficulty that e.g. Germany's largest constituent state, North Rhine Westphalia, is about to do the "impossible", and abolish university fees altogether.
I doubt whether the long-term continued existence of universities is compatible with the nearly absolute domination of the above ideology. So one can expect them to mutate into "skills and tooling" factories for serving the labour market. Oxford and Cambridge will be able to resist for some time, but at a great moral cost.
In the coming decades, I would expect much critical thought, including a lot of philosophy, to move outside of the universities.

[Chris Bertram]

Incidentally, Robert Stevens writes

"The Vodaphone story is claptrap. Vodaphone have not been 'let off' £6bn as Private Eye report. Her Majesty's Revenue and Customs have repeatedly stated that this is an urban myth."

The £6bn *figure* (rather than the fact of avoidance) is what HMRC describe as an urban myth and it may indeed be an exaggeration. What we do know is that Vodafone made a settlement deal with HMRC to pay £1.25bn and that this was considerably less than they had put aside to settle the case.

[Neil Sinclair]

Robert Stevens writes:

"Calling for HE to be funded properly out of general taxation is crying for the moon. We struggled on for decades on that basis. The result was the near destruction of great chunks of UK Higher Education. No party of any stripe has this as its policy."

There used to be a party that had a policy of paying for university from general taxation. They were called the Liberal Democrats and in their 2010 manifesto (p.39) they said:

"[We will] Scrap unfair university tuition fees for all students taking their first degree, including those studying part-time, saving them over £10,000 each. We have a financially responsible plan to phase fees out over six years, so that the change is affordable even in these difficult economic times, and without cutting university income. We will immediately scrap fees for final year students."

This perhaps might also explain why anger at the cuts has coalesced more noticeably around this issue, since it is a blatant breach of pre-election promises. (Explanation is not justification).

Mike/Matthew also raises the issue of scholarship funds paid for from fee revenue, to address the problem of those from disadvantaged backgrounds being put off from applying. At present, the plan for this scheme is problematic, insofar as institutions with a higher proportion of poor students will be required to pay more (from fee income) for scholarships, which seems a little bit like penalising those institutions that are good at attracting those from disadvantaged backgrounds. The BBC has a story here: http://www.bbc.co.uk/news/education-11928289

It is also worth noting that the proposed scholarship scheme will waive 2 years of fees for students who, at school, were entitled to free school meals. For the last data that is available, only 25 students who took free school meals were admitted to Oxford; 20 to Cambridge (although this is only counting students from England) (see: http://blogs.channel4.com/factcheck/how-many-go-from-free-school-meals-to-oxbridge/258). I agree with Mike:
the government needs to do much more in this area.

[Neil]

Robert Stevens points out that HM customs says that the Vodafone story is an urban legend. Mandy Rice-Davies!

http://www.guardian.co.uk/commentisfree/2010/nov/14/vodafone-tax-evasion-revenue-customs

[Robert Stevens]

Neil

(i) The Liberal Democrats didn't win the May 2010 election. Should we be similarly criticising the Tories (who also did not win) for breaking their promise to get rid of inheritance tax?

(ii) It is, of course, possible that HMRC have settled a perfectly valid claim for £6bn of tax at a figure of £1.25bn. It is, indeed, possible that HMRC are either corrupt or grossly incompetent. However, neither the article by Nick Cohen you link to, nor the Private Eye report, provide any evidence for this whatsoever. All we get is innuendo and assertion. Even assuming, for the sake of argument, that HMRC have been corrupt in this case, to what extent would recovery of this £4.75bn alone help to close the *annual* gap between expenditure (50% of GDP) and revenue (38% of GDP)? The problem is the deficit, not the overall debt. We can have a debate about whether Osborne's cuts are too quick and whether Darling's £40bn of cuts would have been more appropriate, but there is no magic money tree. We should focus our efforts on standing up for the most vunerable.

[David Wallace]

To Chris Bertram: yes, point taken, and indeed the devil may be in the details, but it's still the case that universities get to choose whether to attempt to meet these widening-access criteria. If they are absurdly onerous, then yes, I agree: that changes matters.

To Grahame Lock (and probably others inclined similarly): three points.

(i) A symphony orchestra is a partly-private, partly-public good. Part of the benefit of symphony orchestras is to those who actually listen to them. Part of it is a broader public benefit. The fairly natural way to pay for something like that is by subsidising the tickets but not making them free. That's basically what we do. University education, likewise, is a partly-public, partly-private good. The current proposal subsidizes university fees (via the subsidies for deferred repayment) but doesn't make it free. I don't really see the difference... except that this subsidy, arguably unlike the symphony-orchestra subsidy, is heavily targetted to those who need it.

(ii) I'd be interested in your views on the US system. No doubt it's terribly imperfect in indefinitely many ways, but it seems to sustain a HE sector that both supports many world-class institutions and educates a very large swathe of the population. Is the worry that the US system is actually appalling, and for the UK sector to end up anything like it would be a disaster? Or is it that there's something about the UK proposals that would make things far worse than in the US?

(iii) There are, of course, other things than injustice. But those of us in the comfortable middle class need to take a long hard look at ourselves before deciding that there really is no alternative than to increase injustice so as to sustain those other things through general taxation. That argument is defensible, but it has to be made with open eyes and keen awareness of the cost - it can't just be an automatic, "education should be free" mantra. (Not that I'm accusing those on this blog of that level of simplicity. Those protesting, on the other hand, sometimes seem to fall into this trap.)

[Gordon Finlayson]

To Robert Stevens. Where did I imply there is no problem about paying for Universities because there is a magic money tree, or that Universities can and should be entirely financed from general taxation? You pay no attention to what I said. I stated that students were mainly protesting at the tripling of fees, which is true. That is understandable enough, though I don't think myself think that it is the only or even the most pressing issue. In fact (though I did not say or imply this) I believe that education is a public good and has a reasonable claim to be funded from general taxation, if anything does. Indeed, our universities fared reasonably well, under just such a funding arrangement, until not that long ago. And even without money trees there are public funds available for some things - helping Ireland's economy, maintaining an outdated nuclear deterrent, waiving Vodaphone's tax bill etc. It a question of what the Government chooses to invest in. It is true that education is also a private benefit, (but not only that) and so it is fair for students to make a contribution to the costs of their education. Given that, I'm in favour of some kind of graduate tax. But, if a graduatae tax is a non-starter, because it does not give Universities money up front, or for some other reason, then I'm in favour of the combined funding of Universities through teaching grant (funded from, guess what, general taxation) and tuition fees. That said, I think the T grant should co-vary with the fees. An elite institution that can command high fees should have a smaller T grant, and non-elite institutions that cannot, should have a higher T grant. This is fair because the prestige Universities which can charge high fees also tend to provide better career prospects to their students. (T grants should not be limited to STEM subjects, but there can be multipliers to take into account the higher costs of delivering teaching in STEM areas.) I also think that, for various reasons, all Universities should raise their game as far as endowment funds are concerned. But that is a medium to long term project, and does not provide a short term solution. None of that invovles a magic money tree. None of that is crying for the moon. And it's better that Browne's tawdry proposal to shift the burden of funding entirely onto individual students, which does reflect his drearily economistic ideology, and will have all kinds of adverse effects including making University education kow-tow further to the imperative of customer satisfaction.
As for Mike, I accept the point that there are greater injustices around to be rectified. But my point was not claim how just the protests were. Yes a lot of the protest is motivated by the self-interest of the protesting group. That's what happens in real politics. However, this particular group of people - middle class students pupils and parents - happen to be a very important political group, whose votes tend to determine the outcome of elections, unlike most of the votes of the working class and the poor. I think the Government has gravely miscalculated the degree of opposition and resistance that their HE policy will meet. There will be widespread political unrest. And it might well be that this opposition to their policy is effective. (This is not usually the case. Think of the protest against the Iraq war.) Whether the students, pupils and parents succeed in building a wider coalition in the context of the current austerity measures remains to be seen. The opportunity is there, and I think the signs are that they can. Witness the effective flash protests outside Topshop and Vodaphone, and the fact that Wednesday's rally will be supported by the TUC, NUT, FBU, RMT, PCS, GMB, CWU and NUJ. I suppose the proof of the pudding is in the eating. Let's see what happens on Thursday and how the Government's settlement of the University funding issue shakes out.

[Mike Otsuka]

Bear the following in mind before concluding that the fee increase should be voted down on Thursday because of the effect it will have on access to higher education:

The last time fees were tripled -- from £1,000 to £3,000 in 2006 -- there was a lot of concern that this would deter students from poorer households from going to university. Protesters and pollsters said they would be. It apparently did not end up doing so. See this Office for Fair Access report:

http://www.offa.org.uk/wp-content/uploads/2010/02/OFFA-Fees-Review-submission-first-call-for-evidence-January-2010-FINAL.pdf

One might reasonably conclude that things will be very different this time around, given how much larger this fee increase will be in absolute terms -- from £3,000 to £6,000-£9,000.

Because, however, of an increase in loan writeoffs (caused in part by the rise in the income level from £15,000 to £21,000 at which one must begin to repay), both the increase in lifetime debt repayment for the average earner under the new system and the overall amount of debt repayment are much more modest than one might think. See this from the Institute for Fiscal Studies on the impact of the Browne proposal on lifetime debt repayment:

"Based on IFS models of graduate lifetime earnings, the total repayments over the working life of a typical graduate would amount to around £20,100 (including maintenance loans) under the assumption of a £6,000 annual fee. If all universities were to exceed this ‘soft cap’ and charge £7,000 a year, the average graduate would repay £22,100 in total; with a fee of £8,000, graduates would repay £23,300 on average. By way of comparison, under the current system the average graduate pays back £15,400 over their working life."

(I don't think the IFS has yet released comparable figures for lifetime debt repayment under the government's proposal. They may end up being higher.)

Regarding Nicholas's remark about Krugman and Stiglitz, I wasn't relying on them for insights into the Tory party's attitudes about higher education. Rather, I was relying on their view, and that of people like David Blanchflower, that there is no good economic case for the pace and extent of the government's cutbacks in spending across the board. I rely on 'Yes, Minister' for insights about the attitudes of the likes of David Cameron to higher education: he wants to protect Britain's universities ... both of them.

And, finally, I completely agree with David Wallace's reply to Grahame Lock.

[Mike Otsuka]

Gordon, it's simply not true that Browne's proposal shifts the burden of funding entirely onto individual students. Even with the elimination of the T grant for the arts, humanities, and social sciences, there's still a significant government subsidy of teaching in these areas. See my comments on an earlier thread:

http://leiterreports.typepad.com/blog/2010/10/the-privatisation-of-the-humanities-in-england.html?cid=6a00d8341c2e6353ef0133f5385442970b#comment-6a00d8341c2e6353ef0133f5385442970b

http://leiterreports.typepad.com/blog/2010/10/the-privatisation-of-the-humanities-in-england.html?cid=6a00d8341c2e6353ef01348863abd8970c#comment-6a00d8341c2e6353ef01348863abd8970c

[Harry B]

For what it is worth (I'm a Brit, have worked in the UK system, but most of my career has been in the US), the record of the non-elite sector of HE in the US is mixed at best (not sure what the comparison class is, but non-selective institutions, which the vast majority of students attend, have high attrition and low graduation rates).

I'm with those (eg Mike) who are saying there is a good case for shifting the costs of higher education to the people who benefit from it the most and (for public good reasons) exempting low earners from the requirement to pay back, and gradually forgiving loans for those who enter lower-paid jobs in public service, heavily subsidizing those in most need, and and concentrating resources instead on early childhood where the public good case for investment is more powerful. The problems here are i) some of the details (eg the caps)and ii) the rapidity of the proposed shift to privatizing the costs. Whereas US parents have 18 years to prepare for the onslaught of school fees, and highly selective (and even moderately selective) institutions have considerable accumulated resources to subsidize high need and to support at risk students, if the proposal goes through it will hit institutions that are completely unprepared to meet the needs of high need students, and families that have had hardly any time to save. Strange thing for conservatives to do.

[Grahame Lock]

@ David Wallace: It's difficult, now that we are in the details of the argument, to deal adequately with the points raised, in the space of a comment. So, simplifying:
(1) I would say that the symphony orchestra comparison, within its limits, is illuminating. The point (here) is that the value of the music made by a symphony orchestra is not, or is not in the first instance, to be measured in terms of justice or fairness or equality (either in respect to the conditions of its existence, or in respect to the consequences of its existence), nor of any contribution that it might make to the national economy (etc.). Its value is intrinsic, or perfectionist, on the view that I am concerned with. The intrinsic value of music cannot, on this view, be reduced to any more general over-arching value, which would include economically measurable worth. There are (a kind of Isaiah Berlin argument) diverse and probably incommensurable values in the world (or wherever values are to be found). That is why not everything, even nowadays under western capitalism, is funded just by "free market" operations: subsidies are (often) a de facto recognition of the intrinsic value of what is being subsidized.
As a matter of fact I should not call what the British government will be offering students by the name of a subsidy. Subsidies to university education are just what it is abolishing (with a few exceptions, where the subsidy is maintained for utilitarian purposes - biochemistry makes a contribution to the national economy etc.). Like other money lenders, it will provide a loan to cover advance payment of (the mightily increased) fees, to be repaid at a rate of interest 3% above inflation, and probably higher than the rate at which the government itself borrows the money. The only difference is that it pledges itself in advance to make such a loan to any undergraduate admitted to a university.
(2) I do not know enough about the US higher education system to comment; except that I assume that it is Ivy League endowments which make it possible for the richest private universities not to operate on merely market principles. That is, if Harvard, Princeton or Yale wants to promote Sanskrit or mediaeval history or the philosophy of religion, it can do so, without government approval and without needing to fund these disciplines entirely out of consumer payments. In other words, it is because the donors have withdrawn their monies from the market arena and transferred them to the universities, on the basis (I assume) of a belief in the intrinsic value of scholarly activities (and not generally on the basis of justice considerations), that such institutions can hold academic norms high.
(3) In spite of all comments, I cannot understand why, when what is in danger is the very idea of a public good whose value is (to repeat) intrinsic, commentators should insist on raising the issue of justice and injustice as a primary concern. One may believe that scholarship is a good in itself; or pictorial art; or music; or sport; or many other things. In which case the conditions of their survival and flourishing are what claim first attention. It is e.g. very unlikely that we should have the great pianists we have if a criterion of justice were to be applied to the conditions under which they came to learn their trade: expensive and regular lessons, paid for by parents, from an early age, for many years. An investment which most families could not have made. Consider for instance the case of Martha Argerich. And there are many other similar cases.
This - to make a more impressionistic comment - is the danger, as I see it, of the ubiquitous intrusion of justice considerations: they tend to swamp other cogent concerns. I believe, even, that there is a scholasticism of justice theories that dangerously traps some of them in an overly narrow view of what is important to human existence. I note, at the merely political level, that "fairness" (whatever it means by it) is the banner under which the present British government has launched its attack on the above-mentioned idea of the university.
That's enough for now.

[Robert Stevens]

Gordon Finlayson asks

"Where did I imply there is no problem about paying for Universities because there is a magic money"

That would be in the second paragraph of your original post.

[Chris Bertram]

There are issues of justice here, as there are with any such proposal but they are not the only issues. However justice has a number of dimensions. The minister who pioneered the scheme, David Willets, published a book just before the general election in which he deplored intergenerational injustice and specificially the way in which today's young people will be picking up the costs incurred by the baby-boomer generation. He has now introduced a scheme where the costs of higher education will weigh less heavily on earlier generations (given their representation among higher-rate general taxpayers) and more heavily on young people themselves in the future. As for the synchronic view (as it were) we just don't know yet (though the IFS may tell us).

Then there is the rhetoric of fairness as opposed to its substance: there's a lot of this about at the moment including around the pensions issue. Perhaps unsurprisingly, government ministers are keen on noticing that people enjoying decent benefits unfairly privileged compared to those who are not. The motive, however, is to cut, and fairness talk is a way of stoking resentment and building support for cuts.

George Osborne (the Tory Chancellor) is on record as saying that these cuts provide the Conservatives with a once-in-a-generation opportunity to roll back the state. It isn't, fundamentally, about the defecit (to which these HE finance proposals make little difference anyway because of the upfront costs of the loan scheme). Some institutions (Oxbridge and other Russell Group universities) clearly also see this as an opportunity to get the state out of their business. Hence, I believe, the basic reason why some of the academics in this thread are sympathetic to it: the hope is that it leaves them, at their institutions, free to get on with their jobs.

Of course that expectation is only correct on a further assumption: that this is just the beginning. That once the principle is through, caps will eventually be lifted, Oxbridge (and UCL etc) will be free to charge a "market rate". But it would perhaps be uncomfortable to gaze too far into that future because it would make it harder to rely on the genuflections to fairness contained in this week's version of the changes.

Well I too resent the way in which HE has been treated by successive government as a tool for social engineering, at the way we've been forced to jump through hoops and so on. But I don't much like contemplating a future in which I discuss the comparative merits of egalitarianism and prioritarianism with smart young people from wealthy backgrounds who go on to jobs in the City, whilst the society around us becomes less and less equal and whilst the least advantaged become less and less of a priority and whilst philosophy (and other humanities subjects) becomes increasingly unavailable outside the elite institutions.

(I note, by the way, that Mike has not responded (and nor have others) to my point above about commodification, about the further extension of the market principle into an area of life where it was, until recently, weak. Not only is that a bad thing in itself (tell me if you disagree Mike) but it is also involves a massive change in personal and social relationships with completely unpredictable consequences.)

[Mike Otsuka]

Harry writes,

“...it will hit institutions that are completely unprepared to meet the needs of high need students, and families that have had hardly any time to save.”

I agree with the former but disagree with the latter. There will be less need for parents to save in order for their children to go the university. Grants and loans to cover living expenses during university studies will go up under the new proposal. And, as before, no fees will be repayable until after graduation and after the student earns over a certain amount. This amount has been raised from £15,000 to £21,000.

Grahame,

You’re mistaken in claiming that the only difference between the government loans and private loans is that the government guarantees to extend these loans. There’s also a significant state subsidy of these loans in the form of extensive writeoffs. See the above quotation from the IFS report plus my above two links in response to Gordon. The difference between this subsidy and the pre-tuition-fee subsidy is that everyone’s education was subsidized out of generation taxation under the old system, whereas subsidies out of general taxation will extend only to those who don’t end up earning more than a fairly high amount under the new system.

You write,

“Michael Otsuka seems to think that the universities issue is all about "injustice". Some contributors tried to correct him, but to no avail. There are other things than justice - like symphony orchestras and scholarship.”

State subsidy of university scholarship and other research out of general taxation will be frozen at the level of £4.6 billion that Labour set shortly before it was voted out of government. I don’t think this should be abolished, since I think the government should not wreck its superb universities, because I think the state should support excellent scholarship as well as addressing injustice. If universities charge close to £9,000 per year in tuition fees (the full amount of which many students won’t pay and which will be provided out of general taxation – see above), then the amount of money they receive per student for teaching will remain roughly at current levels. The upshot for universities that charge this amount is that their finances will be tight over the next few years, though there won’t be the sort of extensive cutbacks that those who receive support from just about every other government department are facing. Those universities whose contributions to scholarship have been greatest will probably be able to charge £9,000 a year. They’ll be able to make it through these lean years without their scholarship being decimated. Things may be much more difficult for other universities.

As a matter of what’s now politically possible, the resources of all universities will be decimated if tuition fees are voted down on Thursday.

[Nicholas Vrousalis]

If I may be blunt, many of the pro-fees arguments here seem to me to have bought into a large amount of neoliberal (i.e. pro-market right-libertarian) BS.

Mike, you write:

"As a matter of what’s now politically possible, the resources of all universities will be decimated if tuition fees are voted down on Thursday."

If what's politically possible is what Tories & co. can do at present without their whole political circus collapsing, then you're right. But Cameronite Toryism doesn't exhaust political possibility. Meeting the needs of HE through general taxation (calling, where necessary, the bluff of capital threatening to relocate in the event of tax hikes through nationalisation, etc.), is not politically impossible. The Tories won't and can't do it, but so what?

David, you say:

"The current proposal subsidizes university fees (via the subsidies for deferred repayment) but doesn't make it free. I don't really see the difference... except that this subsidy, arguably unlike the symphony-orchestra subsidy, is heavily targetted to those who need it."

The Tories are not interested in satisfying peoples' needs: they are interested in 'rolling back the state' à la Thatcher. So the minor premise that their reforms (will) in some way track fairness is false.

But your (suppressed) major premise is also, I think, false:

"that there really is no alternative than to increase injustice so as to sustain those other things through general taxation."

There no reason to assume that the HE market the Browne report purports to establish would form a just institution, or that it would tend to produce *just outcomes*. Justice, I assume (with Mike and others), requires some form of equality. And, if so, the HE market is *constitutively unjust*, since it implies a class of inequalities between those from priviledged backgrounds -i.e. those who are less debt-averse and/or who have had much better pre-uni education, etc.- and those from non-priviledged backgrounds. (This partly responds to your (1) and (2) above.)

So there's a justice argument *against* commodification in general, and in HE, in particular. And there's also a non-justice argument against commodification, which is about the proper form that the teacher-student relationship should take (this is what Chris seems to be insisting on).

[Mike Otsuka]

Chris,

I wasn't able to read your latest comment before I posted mine.

I grant that, being at UCL, I have an interest in the fee hike going through, as opposed to the alternative. I'm not an impartial observer.

I don't, however, favour this as the first step towards the privatization of Russell Group universities. Rather, my preference, for what it's worth, is for something along the lines of what I sketched in this comment on this blog about a year and a half ago:

http://leiterreports.typepad.com/blog/2009/07/university-of-california-budget-crisis-update.html?cid=6a00d8341c2e6353ef011571106cf3970c#comment-6a00d8341c2e6353ef011571106cf3970c

At least in that case I wasn't commenting on something that was in my immediate self-interest (as opposed to my class interest), and I didn't realize at the time that huge fee increases were on the cards in the UK.

Having taught at two very different private universities in the US (Pittsburgh and Yale), which I can compare with a couple different US state universities (UCLA and Colorado) where I've also taught, I didn't find the private universities to be anything like the commodified hell that you fear that the Browne proposal will bring about.

Nicholas,

I'll spare you further responses, so at least you won't have to be the cause of my posting any more of what you regard as "neoliberal (i.e. pro-market right-libertarian) BS."

[Grahame Lock]

Mike - I cannot but agree with you that there is indeed a write-off factor in the planned government loan scheme (thanks for the links). Of course, there could also be private loans with write-off provisions. My point was that a loan scheme is not a subsidy (see below for the relevance of this). Nor would I be confident that the terms of the plan are maintained over the years. Once a finger is offered to the government, a later government may well take a hand or two. There are plenty of historical precedents.

But reading Chris Bertram and other contributors, I suppose that a central point is this: some of us believe that the government's universities policy should be assessed not just - or not in the first place - as a new fees scheme (though that is far from insignificant), but rather as one expression - among others - of the imposition of a neoliberal view of what a university is for in the first place: roughly, according to Browne's presentation, to provide the consumers with what they want and to contribute to the national economy. In Brian Barry's Political Argument there is a section which I've always liked, in which he distinguishes want-regarding from ideal-regarding principles. A liberal, in the purest form (we might say a neoliberal), is someone who holds that only want-regarding principles should have a weight in determining (domestic) state policy. The Browne Review (the basis for the government plans) rejects what it calls any "objective metric of quality" for determining the distribution of state funds and substitutes "student choice" and "student satisfaction". Thus it makes a decisive move in the direction of neoliberalism, dropping ideal motivations (the subsidy of objectively - or intrinsically - valuable activities). It is true that Browne is not consequent, since (see above) he adds or presupposes a utilitarian defence of a remaining subsidy to teaching in the natural, especially applied sciences. Moreover, the Browne student-consumer is also an ideological construct. But by and large this is yet another lurch in a dubious political direction - and not just a different funding scheme.

The above remarks concern what Nicholas calls the non-justice objective to commodification. I would be happy to see it established that there is also a justice objection, but that was not my own purpose.

You write that: "As a matter of what’s now politically possible, the resources of all universities will be decimated if tuition fees are voted down on Thursday."

We can agree or disagree on the empirical question of what is now politically possible. But there is a large question of political ethics involved too. When a government - which has the power to do so - imposes a given policy, it can of course narrow the options available to its opponents to, roughly, a couple - go along with us or destroy yourselves. If the government were to legislate that all university teachers must stand on their heads and chant neoliberal refrains each morning in class - failing which, financing for the universities would be withdrawn - the prudent thing might well be to go along with these absurd requirements, since otherwise the resources of our institutions would indeed be decimated. That wouldn't mean that there was any intrinsic sense in standing on one's head or in the chanting. The same applies, it sees to me, to the demands that this government is imposing. It claims to save the universities - financially - but would break their spirit. And unlike standing on one's head and chanting, its intervention is intrinsically not only damaging but arguably fatal to academic life: namely, in the manner discussed earlier, as tending to lead to the universities' transformation into "tooling" factories.

[David Wallace]

I was part-way through writing some specific responses to Nicholas Vrousalis, but I think some of this debate is in danger of getting bogged down. So let me make some broader points instead.

(i) I'm no fan of the current government, but I don't see that speculation on their underlying motives is especially salient. We have a concrete plan to consider here, and the broad contours of the subsidy it offers are already clear: targetted subsidies via inflation-level interest on loans for those earning below the repayment threshold, and via writing off the residual debt after 30 years. Realistically, it's not going to change much prior to the next general election, and we have no real idea who will be in power then. So we ought to judge this proposal at face value, at least to first approximation.

(ii) I at least (and I think Mike Otuska also) don't just think a funding model along the proposed lines is more attainable than a general-taxation model; I think it's fairer, too. Even if the government did increase taxes in some progressively-acceptable way and raised several billion in revenue, I think there are better places to spend it than higher education. (Preschool education and child poverty would be my top priorities, for what it's worth.)

(iii) Chris Bertram suggested that Russell group institutions see the proposal differently from others; I think that's a fair point. (I'm at Oxford.) But I do see this kind of framework as a way of managing to have a large HE sector while still maintaining elite institutions. Those elite institutions managed fine on government money while only a tiny fraction of people went to university. When the sector expanded, that money got spread very thinly, so Oxford (for instance) started not being able to afford the rather expensive education it provides. It's perfectly defensible just to say that we shouldn't have elite institutions that spend far above the average on teaching. But if we do want them, and we don't want to close down the rest of the sector, we have to channel more money to them than the average. It's very hard to do that out of general taxation because it's seen as unfair. And it *is* unfair. It's far fairer to supply the difference (in arrears) from the students themselves, given that they're the main beneficiaries of the more expensive tuition they get. (Not the only beneficiaries... but then, they don't pick up the full differential cost, either, because of endowment money. I accept that's a stronger argument for Oxbridge, with relatively large endowments, than for the rest of the Russell Group.)

[Ian Rumfitt]

Interesting news just in: David Willetts's draft letter of guidance to the Director of the Office of Fair Access to Higher Education (Offa) is now on the BIS Department website. Any university wishing to charge a fee of more than £6000 p.a. must reach an agreement on widening participation with Offa, and the Director is required to follow Willetts's guidance in striking those agreement. One noteworthy principle in the letter is that the *proportion* of its fee income that a university devotes to its widening participation schemes should not fall (section 4.1).

As the details of the Government's HE policy get filled in, Browne's vision of autonomous HEIs charging what the market will bear seems to be receding further into the distance. I am starting to think that we may well end up with something far more familiar: viz., a tightly regulated system in which the Treasury exerts pressure (now via Offa) to keep the unit of teaching resource as low as possible. The significant change is that this pressure will be exerted on behalf of the students who will be repaying the loans, rather than on the Government's own account -- a bit like the gas and electricity regulators.

[Grahame Lock]

Very briefly, to David:
- I don't think we need speculate on the motives underlying the government plans. These motives have been publicly stated by Browne and the government, and consist (but I'm repeating) in imposing not only a new fees and loans regime, but a whole rationale for the universities' existence and operation, which reduces them (simplifying) to institutions satisfying the desires of student-consumers and turning out diploma-holding graduates who will contribute to the national economy.
- Isn't it only "fairer" to transfer the costs of what was a public and publicly financed good onto individual shoulders on an atomistic (or family-molecular) conception of who ought to pay for what? In which case, why shouldn't parents be invoiced on a similar basis for the real costs of school education? Or patients for the real cost of their medical treatment?
- According to the figures I've seen from Oxford, the government's fees hike will not leave the university better off than before, because of the loss of the T grant and other factors. Unless fees are further increased above £9,000 - with all the consequences.
- Finally, wouldn't the criteria for "fairness" adduced above prohibit the use of the Oxford endowments for Oxford students? (At present, a subsidy to each undergraduate of least £7,000 a year.) Why, on those criteria, shouldn't the undergraduates themselves pick up that bill too? That would raise Oxford fees to nearly £16,000 a year. Would the government offer loans to cover that?
I agree with David that we're now at risk of getting bogged down, so I won't continue. But I am grateful to him, Mike, Chris and others for pushing us into thinking more deeply about what we're for and against and why.

[David Wallace]

Briefly in return to Grahame (all of whose points are fair and well taken):
- Universities are partly institutions that contribute to the national economy; they also have other goals. So funding (for teaching and research combined) should be based on some kind of hybrid model. They already are; this just shifts the balance. In my naivete, I don't find the consequences of that shift as apocalyptic as some, and I continue to worry that failure to recognise any part of universities' contribution to the economic prospects of students does blind otherwise-left-liberal people to the seriously regressive nature of the current system.
- I don't have an ideological view that in all cases, any benefit received by the recipient from public and third-sector organisations should be invoiced to them. I'm in favour of broadly the status quo in state funding of school education and healthcare, because I don't think in either case that that status quo is a regressive use of public money, whereas I do in the case of university-level education. (One-sentence reason: lack of universality - though of course one sentence doesn't really do the case justice.)
- The devil is going to be in the details as regards whether Oxford net gains or net loses out of the proposal. Up-front, we go from £3K fees plus ~3.5K T grant to £9K fees, but of course there are other costs lurking. It's not going to make a radical positive difference, to be sure. I'm afraid I am indeed in favour of the fees going up beyond £9K for Oxbridge in the fullness of time. (Not massively up, though.)
- As I've said repeatedly here and elsewhere, education is a mixture of public and private good. I'm happy to regard the use of endowment funding to support Oxford students as part of the public-good component. (In fact, for that very reason I'm totally sanguine about charging them the balance. As I noted elsewhere, I think things get less straightforward outside universities with endowment money.)
I'm grateful in return for Grahame and others pushing me on this - it's illuminating.

[Mike Otsuka]

Grahame writes: “Mike - I cannot but agree with you that there is indeed a write-off factor in the planned government loan scheme (thanks for the links). Of course, there could also be private loans with write-off provisions. My point was that a loan scheme is not a subsidy (see below for the relevance of this).”

I agree that there might be write-off provisions in private loans. But no private lender would lend money to students on the write-off provisions of either Browne or the government. The IFS has stated that, under the Browne proposal, “with a fee of £8,000, graduates would repay £23,300 on average.” This loan would include not just £24,000 in fees but £11,250 in maintenance. Try finding a private lender that will extend a £35,250 loan to people on average repayment terms of £23,300. Given the impossibility of finding such a private lender, it’s no surprise that Browne wrote that “banks will only be willing to offer finance on the terms described in our proposals if they receive a significant subsidy from Government”. So I’m baffled that you continue deny that the loan scheme amounts to a subsidy. Perhaps you’re right, in what you go on to say, that there is no perfectionistically-justified subsidy. But a non-perfectionistically-justified subsidy remains a subsidy.

I’m in agreement with David regarding the non-apocalyptic nature of the shift, at least under Browne, towards a greater student contribution. Our Provost estimates that UCL would fall a bit short of recouping what it had lost in the T-grant if it sets fees at £8,000 (=£23,300 average repayment under Browne). Compared with the £15,400 repayment under the current system of £3,000 fees, this is not a huge shift.

Those who end up earning significantly above what the average university student earns would end up paying significantly more under both Browne and the government's proposal than under the current system. But I don’t see how the significant increase in the financial burden of those at the high end of the scale among the privileged comparison class of university graduates should be cause for outrage rather than something to applaud for its greater progressivity.

[Alex Gregory]

I'm a bit late to this party (though I have found it illuminating to follow), but a couple of points that I don't think have been made:

1) David Wallace writes that we should consider this proposal on its own merits and not as part of some broader tendency. I don't see why this is true: what's being sold to us is not just a particular policy, but also a justification for that policy: that education should be understood primarily in terms of economic benefit to the recipient, and that having teaching funding follow the student, as opposed to being distributed by the government, is going to improve university standards (more below). One might think that these claims are false and distort the overall debate, and want to express that viewpoint.

2) The second justificatory claim above - that university standards will improve by increasing the financial effects of student choice - hasn't received much attention above, but seems to me pretty worrying. Students decide which university to go to by all sorts of measures that are highly unrelated to university teaching quality. I suspect that one result of the new system will be a much greater university expenditure on sports facilities, university advertising, halls of residence, and so on, all at the expense of teaching.

3) Some of those here supporting the bill are keen to emphasize that politics is the art of the possible. I agree, but tend to think that this cuts against some of what they say. For example, David Wallace writes that, even if we could convince the government to increase general taxation, that money should go to sectors other than HE, such as preschool education. I agree, but think that pursuing [increased taxation + higher preschool education spending] is less political viable than pursuing [increased taxation + maintaining HE funding]. The latter is in the public eye, and has popular support. The former is, right now, a non-issue. Or for another example, the claim that university funding will be decimated if this bill fails seems exaggerated. If the bill fails, the government will be forced to take alternative steps to keep the university sector afloat - the obvious option, I would think, being to increase business tax on the grounds that UK businesses benefit from the highly educated workers they employ.

4) Finally - and this may be better off as a new thread after Thursday (Bryan?) - any ideas for what those of us braving the UK job market should be expecting?

[Gordon Finlayson]

Mike, yes you are right that there is a subsidy, and that it's just rerouted via the loans. I think that makes all the difference. It surely does reflect an underlying ideology - it's similar to the ideology underlying voucher schemes. Students will purchase education - specifically tuition - from Education providers. Education providers will compete for students. The competition is supposed to drive up quality in the sector.

I'm not convinced that it is just a pragmatic move, designed to promote various ends that the Government has had in mind for some time. Forcing HE providers especially those lower down the prestige scale to change their provision - to introduce 2 year degrees, teach more STEM and vocational subjects etc. Isn't that what the lower £6000 rate is for? It is significantly less than the present T grant + fees. Another end might be to tip the balance back from research to teaching, to counteract the incentive that QR funding has given to Universities via the RAE to do good enough teaching and excellent research. Not sure it will achieve that either. Universities will pay increasingly more attention to student satisfaction, but that need not equate to better teaching.

But then maybe the Government and Browne are not very confident that this new arrangment will realise its ends after all, since it has also created the HEC and given it more regulatory powers to make Universities do its bidding.

Anyway it is certainly a radical change. It is not just an incremental "shift towards a greater student contribution." It's a large shift + the abolition of all T monies for non STEM subjects. It is hard to know in advance what its effects will be. It may well force academics to perform different kinds of rent seeking activity. I'm now having to spend my time going to targeted 6th form Schools and selling philosophy, and the University of Sussex, to pupils, to make sure our applications don't drop in 2012, which might result in closure. I have not had to do that before.

It has also created uncertainty at the institutional level. University managers are doing a lot of guess work. Student choice is now driving the funding vehicle, and we don't know where it is heading. Their actual choices will to a great extent determine the fate of universities. It is possible that many fewer students - with the headline figure of £9000 per annum in their heads - will choose not to go to University. It is very possible that they will go to university but that many more of them will want to take vocational courses, or what they perceive to be vocationally beneficial courses, and that this might lead to the decimation of the humanities. Not apocalyptical, maybe, but not good.

That's why I think you are too sanguine. The comparison between Yale and Pitt and Colorado or UCLA is misleading. Yale and Pitt (I surmise) have enormous endowments, so that fees provide a small proportion of their income. Even UC Boulder receives only about 12% (I think) of its money from the federal State. It also has large endowments. Private and public universities in the US are not so different. At least the institutions you list are more like each other than they are like any British Russell Group or 1994 Group University. British Universities are much more vulnerable to changes in policy, because they rely so heavily on Government funding. A radical shift in the structure of that funding will have far reaching institutional effects.

[Grahame Lock]

Mike - I'm not an expert on funding and finance. It's just that I have doubts as to whether we can really talk of a substantial element of subsidy in respect to the government loans (the proposed scheme). Malcolm Gillies has done some good work on this. Estimates of what will happen to graduates under the new system vary. There seems to be terminological confusion too. Gillies recounts that Lord Browne, at a BPP University College talk, claimed that what the students would owe "is not debt". But he then went on to talk about "debt write-offs". Anyway, in his Review, Browne forecasts that 60% of graduates will have some of their debt, if that is what it is, written off. In his BPP talk he says 70%. The BBC forecasts 50%. But what would the size of the write-off be? Browne estimates: on average £1,500-£2,000 per graduate. But (Gillies again) a lot depends on the interest rate. This was going to be set at 2.2% above inflation; now it is going to be PCI + 3 percent. And what will inflation be? Most graduates will continually rack up more debt by incurring interest, and at a commercial rate. The fact that there is a partial write-off of a debt doesn't mean that the debtor hasn't already paid back, in real terms, more than he or she originally borrowed. That's one reason why I wouldn't be so sure that we can talk about a subsidy in this connexion.

One can add up the numbers in very different ways. Here for example is Iain Pears: something to note, he writes, "is the extraordinary nature of the loans system being proposed, which is that students will be charged at 3 per cent plus inflation for a very long period of time once they hit a certain level of income. This is sheer profiteering disguised as fairness. Essentially, the government will be requiring individuals to issue 30-year index-linked bonds on their own balance sheets, rather than do it itself. A few sums shows what this might mean. For the government will raise the money to advance the loans on a flat rate basis. It will, in other words, borrow the money at about 2.5 per cent, and lend it out at 6.1 per cent, more if inflation increases. While it will enjoy the benefit of seeing its real debt eroded by inflation, the student will not be permitted the same escape route. If only half the total number of students take out a loan of £7000 every year, then that would amount to a transfer from the state’s balance sheet to those of individuals which stabilises over 30 years at about £110 billion. The government would pay a peak £2.75 billion a year in interest for this, and receive peak income of £6.75 billion back .... I know of no other case of a government requiring its citizens to be in permanent debt. The argument that this is just like a mortgage is specious, as mortgages are not index-linked, there are a wide variety of different time periods available, individuals have a choice of which ones to take, and they are secured on hard assets which have traditionally risen in value over time. None of these conditions applies to student loans." And so on. I don't know whether Pears' figures are correct. But nor would I be so sure that Browne's figures are. Or that loan terms won't be changed by future governments.

So to claim that the government will still be generally subsidizing university education, I'd say, I'm not convinced, as an amateur in the field, by the arguments so far.

Anyway, none of all this touches much on the central argument against the government's plans, an argument which I've already tried to put, and which I won't repeat.

[Harry B]

Graham: "- Isn't it only "fairer" to transfer the costs of what was a public and publicly financed good onto individual shoulders on an atomistic (or family-molecular) conception of who ought to pay for what? In which case, why shouldn't parents be invoiced on a similar basis for the real costs of school education? Or patients for the real cost of their medical treatment?"

There is one significant difference between school education and higher education, which is that (in the UK) the poorer you are the more the state pays for you school education, whereas in the case of higher education the state provides a substantial investment in your future earning power which you can only access if i) you were successful enough in school and ii) you're willing to go to college: conditions that are harder fulfill the further down the social class hierarchy you are and which, in fact, are fulfilled by more advantaged children to a much greater extent than less advantaged children.

In the current environment (low high-end marginal taxes, large wage inequalities, etc) most of the financial return to higher education is captured by the individual who receives the education -- especially the return to elite (Russell Group plus 10?) HE. I agree that the right response to this is to change the environment radically: but its not on the political agenda of any major party.

[Chris Bertram]

The IFS analysis is now out:

http://www.ifs.org.uk/publications/5366

[Mike Otsuka]

Regarding the question of whether the loan system amounts to a significant subsidy:

The IFS report to which Chris links says that "under the Government’s proposals, around 10% of graduates would pay back more than they borrowed (see Table 5). This is due to the proposed 3% maximum interest rate [which tapers in from 0% at the repayment earning threshold to 3% for those earning £20,000 or more above this threshold], which exceeds the Government’s discount rate of 2.2%."

So the government will be gaining revenue from the top 10% of earners but losing money on the other 90%. It seems pretty clear, moreover, from Figure 1 of the IFS report, that the losses the government will incur on these 90% will significantly outweigh the money it will make on the top 10%. So the loan scheme amounts to a significant subsidy.

Moreover, even for these 10% from whom the government will be making money, "the terms of the loan remain more generous than alternative commercially available sources of finance".

[Mike Otsuka]

According to Table 2 of the IFS report, the average lifetime debt repayment for a student is now £16,000. Fees are now £3,000. If fees rise to £7,500, the average lifetime debt repayment will go up to £25,000. If fees rise to £9,000, the average lifetime debt repayment will go up to £27,000.

I *think* (though it's not clear from the table) that, if fees are £7,500, the taxpayer subsidy of the average student loan would be £9,800, and if fees are £9,000, the taxpayer subsidy of the average student loan would be £12,000.

[Grahame Lock]

Mike - I am especially interested in your last paragraph (because it's not about empirical calculations, on which various people and various institutes have, I see, come up with different figures, but about a nice, quasi-philosophical question). Suppose that a student takes a loan from the government, and - for the reasons discussed above - finally pays back, in real terms, more than he or she borrowed. So the government makes a real profit (taking all factors into account). But suppose also that if the loan had been from a commercial source, he or she would have paid back even more. Should we say that the government has (therefore) subsidized the student? Or subsidized the loan? Even though the government (using its leverage) borrowed at a lower rate than what it charges to the graduate? This is difficult, e.g. because our reference is commercial loan terms. But what determines them? What the commercial banks can get away with. In other words, the market. Which, as we know, involves pretty dirty operations in this field (lots of "noise"). My prima facie intuition is that it would be a bit rich, so to speak, to claim that graduates (whether 10% as the IFS report claims, or less, or more) are in such a case being subsidized. If I buy a shirt in an outfitters, at a profit to the retailer, but cheaper than the retail price elsewhere, is my purchase subsidized by the shop?
I think I should sign off this debate now, since - believing as I do that the fees/loans policy is only one expression of a philistine state attack on the university as a bearer of intrinsic academic value - I ought to start subjecting that idea to an examination as careful as yours of the numbers.

[Mike Otsuka]

Grahame,

I assume you're referring to the last paragraph of my 11:44 AM.

I agree that one shouldn't say, and I didn't say, that the government subsidizes the loans to the top 10% on which it makes money. The government subsidizes something only if it spends money and not if it reaps income.

My point was just that not even the unsubsidized top 10% are being lent to on anything like commercial loan shark terms.

[Mike Otsuka]

Gordon,

I take your points in your last comment. Now that I see from the IFS report how heavily the loans are being subsidized out of general taxation, that raises the following question: why doesn't the government instead devote the same amount of taxpayer money to the T grant?

Part of the answer can be found in a comment by Ian Rumfitt on another comment thread:

"the Treasury must pay cash to the universities as students enroll. Those payments are balanced in the national accounts by the students' obligations to repay the loans".

Therefore the Treasury can claim to have contributed to the meeting of its self-imposed deficit reduction target during the next four years by drastically cutting its spending on universities even if it doesn't end up paying any less cash to universities during those years.

I think another part of the answer is that the government would like to scrap T grants in favour of subsidized loans for high and variable fees because it wants to find a way to channel more resources to elite universities without having to do so explicitly. These universities will be able to find many bright takers who are willing to pay £9,000, across the range of courses they currently offer. Others will not. (The RAE is another "competition driven" even if not market-based device for achieving this aim of channelling more resources towards elite institutions.)

I concede that there are compelling, justice-based egalitarian arguments in favour of trying to eliminate distinctions in quality between different universities. But the loss of elite, world class universities would diminish research and scholarship. (A disproportionate number of the professional philosophers who read this blog received their graduate and/or undergraduate education at an elite university. That disproportion goes up among the philosopher whom we most admire. This disproportion is not an accidental correlation.)

For those who are opposed to market-based and other competition-driven devices that differentiate universities into elites and non-elites, and who would like everything paid out of general taxation, would you prefer that every university be equally good? If yes, at what level? Oxford and Cambridge? How would you pay for that? Or would you instead settle for a university system with no world class universities? If not the latter, but you oppose market-based and other competition-driven devices, would you prefer that the government simply choose winners (as American states did when, for example, the state of Michigan decided that Ann Arbor would be the home of its flagship elite university)?

[Chris Bertram]

If anything Mike, I'd like there to be more diversity of provision in the UK (as there is in the US). The "world class" thing is interesting though. Of course, there's a lot of rhetoric about this from vice-chancellors and the like.

Is your outlook entirely consistent? If you promote an entirely demand-driven system, replete with claims about economic benefit and career advantage, then you may find that no-one will think we should have philosophy at all, or that it survives as an expensive taste among those with the means to satisfy their expensive tastes (I'm working on an attractive "aesthetics for libertarians" course to attract some of these punters.) There is no particular geo-political or economic advantage to nations in having world-class philosophical research conducted on their territory, so you may be reduced to selling what we do as a kind of glittering ornament.

I note, by the way, that the argument you relied upon in an earlier comment, the one about "limitless resources" is belied by the your concession now that the changes make no material difference to the deficit, merely a difference in appearance.

[David Owen]

It is a curious feature of this discussion that the focus on the justice of the policy doesn't think through its wider implications for other areas of policy. The issue isn't simply about who pays what but also crucially when and the proposal is, essentially, given graduate starting salaries that it is in their twenties (and perhaps eary thirties) that graduates begin to repay their 'loans' - this will effect at least the following other issues:

1.Level of indebtedness, credit status and access to mortgages of graduates with knock on effects for housing policy.

2. Decisions on whether and/or when to have children, most likely deferring these - note that there is already a generational mismatch between graduates and non-graduates (if we assume income is a reliable external index) which is likely to become more pronounced - and, in the absence of incentives (note current government removal of child benefit for those who will have 'gaduate' incomes), effects on overall birth rates which will have knock on effects on pensions and welfare policy and on immigration policy. These demographic effects might be offset by movement towards the old Eastern European extended family model in which children are brought up by grandparents but given the generational duree of the middle classes is much greater than it was in Communist Europe (where you had kids young to get a flat), this seems unlikely - a conclusion further enforced by rising pension ages, and of course such a model even if plausible reduces labour mobility.

These are just two ilustative issues (and I haven't even addressed the pertient point raised by Chris Bertram about commodification). My point isn't to adjudicate on the justice or otherwise of the policy but simply to raise that point that the kind of blinkered discussion that characterises much of the above in which teh policy is addressed in isolation from anything else is not only bad political thinking, it strikes me as bad thinking about justice.

[David Wallace]

Replying to David Owen: personally speaking, and blinkered though I no doubt am, I did "think through [the policy's] wider implications for other areas of policy". Here's why his two points don't strike me as problems:

(1) The repayment framework is income contingent. From the point of view of indebtedness, credit status, access to mortgages etc, it's functionally equivalent to an income tax hike, not to an existing debt.

(2) Relative to someone with no student loan, the 9% repayment rate on income over £21,000 is equivalent to a 2p basic-rate tax rise for someone on £25,000, or a 3.5p rise for someone on £30,000, or a 5p rise for someone on £40,000. If there's any evidence that shifts in taxation levels on that scale for people above (in the 5p case, seriously above) the median wage have drastic and undesirable consequences for mortgage eligibility or when people have children, I've not come across it.

(3) In any case, the *existing* loan framework for tuition fees and maintenance charges the same repayment rate - 9% of income - but starts charging it on income above £15,000, not £21,000. So any supposed effects on other areas of policy on graduates should be, if anything, ameliorated by this proposal, which saves anyone earning above £21,000 over £500 p/a relative to status quo. If David Owen really thinks a 9% repayment rate has the social-policy implications he fears, I'm not clear why he wouldn't regard the current proposal as an improvement on the status quo. The proposal costs former students materially more than the status quo (at least for students in the 4th earning decile and up, according to the IFS), but it does so by charging them for longer (and charging them at a lower rate), not by charging them more per annum.

[Mike Otsuka]

Chris,

There are a lot of good philosophy departments at private universities in the US that are able to fill their classrooms even though these students are charged much more than is being contemplated in the UK. The philosophers in these departments aren’t reduced to teaching ‘epistemology of wine tasting’. Yes, there are big differences between the US and the UK (to which Gordon points), but I don’t see why these differences will result in all but the Brideshead Revisited set fleeing philosophy when fees go up in the UK.

Re consistency with my earlier remarks, I won’t go into all the details, but:

1. My ‘limitless resources’ remark applied to a counterfactual world in which the government does what it ought to do. The government’s self-imposed deficit-reduction target, which I reject for Krugman/Stiglitz reasons, is irrelevant to that counterfactual world.

2. Even in such a world, social justice isn’t lexically prior to all other goods. We shouldn’t, for example, sacrifice all art and scholarship for medical research and development that will save more lives. (And, as John Broome points out, even within the NHS budget, some money should be devoted to pain killers even though that money could instead be devoted to saving more lives.)

3. Social justice does, however, take priority over subsidizing higher education for the privileged, whereas there is a distributive-justice-based case for the government’s targeting of its loan subsidy towards lower earners.

4. Had I argued that the government must cut spending for higher education because it must meet its deficit-reduction target because otherwise the bond markets would react badly, then your claim that “the changes make no material difference to the deficit, merely a difference in appearance” would be pertinent. But I never made this claim. Even if I had made this claim, I’m not sure that investors in the bond market (who paid sufficient attention) would regard this particular change in the deficit as merely a difference in appearance.

[David Wallace]

I've just been getting my head around the IFS analysis on the tuition-fee proposal, and it's interesting enough - and different enough from even the well-informed media coverage - that I thought I'd offer a quick summary. I'll try (though doubtless fail) to keep my own views on the proposal out of it, and just give the relevant data. For brevity I'll drop the "according to the IFS" qualifiers throughout, and just write as if they're accurate.

Under the current system, the government pays about £22K per student (over the course of their degree). About £12.5K is the teaching grant. They pay a means-tested grant to students that averages a bit over £4K, and they subsidise the existing loan scheme on average by £5.5K. Students themselves pay about £16K in a combination of fees and repayment on their maintenance loans.

Looked at in terms of how much money universities actually get, they receive that £12K as a teaching grant; they also get about £10K from the students via the existing tuition fee, so in total they get £22K per student. (i.e., the same as the amount the government pays, but that's a numerical coincidence.)

The IFS assumes an average tuition fee of £7.5K. (I think the government hopes the average will be lower; I've seen other bodies argue it'll be higher.) On that assumption:

- the government teaching grant drops from £12K to only £2.5K. (That's the 80% cut that gets the headline attention.) The means-tested grant doesn't change much. The government's subsidy of loans shoots up from £5.5K to a bit under £10K. Overall, the government contribution drops by about £5.5K.

- the contribution by students *on average* goes from £16K to £25K. What that masks is that it gets a lot more variable by student future income: the highest-earning 10% of graduates will pay about double what they do now, the lowest-earning 10% will pay about half what they do now.

- the university income goes up from £22K to £25.5K.

So just in terms of overall cash flow, this represents a 25% decrease in the government's contribution to HE teaching, a 50% increase in students' contribution, and (and this really doesn't seem well known) a 15% *increase* in University teaching budgets.

If you do the same calculation for a university that charges the maximum-permitted £9K, relative to the current system the government's contribution drops by 15%, students' contributions go up by 70% on average, and university teaching income goes up by a quite striking 30%. (That's net of whatever fraction of that income universities charging 9K have to divert to bursaries etc. - but I can't see it being anything like the full 30% increase).

On that basis, here's what the government proposal really does:

- reduce government expenditure on undergraduate teaching actually quite modestly (relative to the 80% headline number, at any rate!)
- increase average costs to students substantially, but on average much less than the x3 headline figure
- markedly increase the progressivity of the system
- significantly increase net university teaching income, with the benefits being much more significant for the institutions that charge the full £9K or thereabouts
- dramatically alter the way in which government money flows to the universities, with most of it coming indirectly via government loan subsidy rather than directly via the teaching grant

[David Owen]

Reply to David Wallace: Glad to know you are not so blinkered but you will perhaps admit that this was wholly inapparent from previous comments which was my point.
On the specific comments you make with respect to the two examples:
1. The fact that a loan is 'functionally equivalent' to an income tax hike rather than a debt does not entail that it will be perceived as such by those who bear it or by whose assessing their financial circumstances and the fact that the 'loan' runs much longer may influence that.
2. We know that household perceptions of debt can a range of affects on family life including on whether and when to have children and marital stress (divorce rates).
So it looks like what the wider policy implications will be will hang significantly on how the 'loan' is perceived and that may itself vary across graduates in relation to background social class.

[David Owen]

Browne Report recommended that student number caps be removed which could have a fairly significant effect on HE provision in terms of number and shape of universities. I simply don't know what the government is planning to do about this, does anyone else?

[David Wallace]

In brief reply to David Owen:

(i) We already know how a 9% payback rate will be perceived by those who assess graduates' financial circumstances, since there are already people paying it. The banks, unsurprisingly, treat it as income tax, i.e. as a decrease in income rather than as an extant debt. They have no motive not to; nor do they have any motive to stop doing so.
(ii) I'm not sure I see the point in speculating as to how, whether and to what extent the hypothetically erroneous perceptions of graduates ten years from now affect their plans and stress levels. Maybe, despite actually being in the system and experiencing the loan as an income-contingent paycheck deduction, they'll still react to it the same way people react to conventional debt (though my contemporaries with student loans don't react that way). Maybe they'll make some other erroneous assumption and be happier and less stressed than they would be if they just had an income tax rise. At some point, speculating about how people will (mis)perceive some income or cost shift, rather than what the objective financial consequences are, degenerates into amateur psychology.
(iii) If in previous posts I'd tried to list in advance all the things that I didn't think would be problematic about the government's proposal, rather than discussing actual objections raised by others, I think I'd have tried Brian's patience even more than I no doubt already have!

[Mike Otsuka]

David Owen,

The government is keeping the student number cap, mainly, I think, because the amount of money out of general taxation the goverment will spend on loan subsidies is significantly higher than under Browne, and hence the government would have to spend much more to expand student numbers.

Regarding your reply to David Wallace, if that's all you're able to offer in response, I think you ought to acknowledge the force of his points rather than simply peevishly saying "Glad to know you are not so blinkered but you will perhaps admit that this was wholly inapparent from previous comments which was my point."

[David Owen]

In reply to David Wallace and Mike Otsuka (and thanks for info on cap),

'Glad to know' was intended as cheerful rather than peevish (I am unsure why you read it as peevish?) - and, yes, I do acknowledge the force of David Wallace's points on the specific examples but my point in response was not 'to speculate on graduate stress levels in 10 years time' but to make the point that the fact that X is, in economic terms, functionally equivalent to Y does not mean X can be treated as if Y from the standpoint of social justice unless we have good sociological grounds for holding that those who bear X will treat it as if Y. David Wallace may be right about how the 'loan' will be seen and treated by future graduates, however, the evidence from the US while generally supportive of that view is mixed and mixed on social class background (see http://www.nelliemae.com/library/nasls_2002.pdf) and, although now a bit dated, the 2004paper by Callander at the Families and Social Capital ESRC Centre looking at HE participation and perception of debt (http://www.lsbu.ac.uk/families/publications/index.shtml) also suggests that social class plays a role.

But suppose, for the sake of argument, that I am entirely wrong and David Wallace is entirely right about all of this, that leaves entirely untouched the point of my original comment, namely, that to think about whether a given policy is just or unjust requires rather more than treating it in isolation from wider policy implications as both of you had tended to do in this thread. The fact that you may have considered these privately is good (hence my cheerful remark to David Wallace) but, particularly given Gordon's starting point which raised the issue of political thinking, it struck me as worthwhile to make this point - and I note that David Wallace's response effectively just agrees with the general point, while disagreeing (perhaps rightly) with the illustrative examples given. So just to try and be clear, my point was this:

In evaluating the desirability in justice of a given policy, one has to consider the broader policy context in which it is enacted and wider policy implications it is likely to have in virtue of that context, where some of these implications will depend on social perception of the policy. Independent of this broader social scientific reflection on (what one might as well call) 'plausible worlds', the justice or otherwise of a policy can't be decided (except where internal features of it are incompatible with basic requiremenst of justice) and it is misleading to speak (as I think both of you have) as if it can be.

[Thom Brooks]

I think Mike is correct: quotas on student numbers will continue. However, there is also an expected major reduction in student visas for international students from outside the EU. If true, then this will mean fewer students having access to British higher education on the whole (and potentially declining income from British universities).

A further observation. These proposals for a new funding regime for universities have met with relatively little scrutiny. Colleagues abroad may be interested to know that a report, "the Browne Report" proposing a new funding model, was only published in mid-October. The legislation passed yesterday evening has many changes from what was recommended in the initial report, changes that were being amended in the days running up to the vote. The legislation received just five hours for "debate" and the PM and Deputy PM (the latter having campaigned with his party against any rise in fees only to u-turn post-election) left the debating chamber when the debate commenced in earnest. Thus, the proposals seem to have faced insufficient scrutiny for measures that are far reaching, long lasting...and whose effects are relatively unknown. This is no way to make sound public policy decisions. I do worry about what might come next...

[David Owen]

Continuing Thom's point, one of the reasons why good policy making takes time is that it has to consider plausible worlds. David Wallace suggests that we don't speculate too much about what graduates will think and how'll they'll perceive their situation in 10 years time because it turns into amateur psychology but speculation disciplined by social science is precisely what is needed in making policy. Even if well-informed rational actors would conisder the policy as he does, that is not the relevant consideration from a policy-making point of view, rather it is how actual people will perceive it on our best social scientific understanding. But I have said this enough so will shut up now and stop boring you with this point.

[Mike Otsuka]

David Owen,

Sorry for misreading 'Glad to know...' as sarcastic rather than cheerful. I withdraw 'peevish'.

I've addressed the deterrent effect that social perceptions of debt burden will have on the choice of going to university in some of my comments above. I didn't address the effects that this would have on choices regarding children, marriage, and mortgages. But, if David Wallace is right, this is a failure to address a somewhat unlikely objection rather than a case of blindness to a problem that it would have been unreasonable to ignore.

[David Owen]

Michael Otsuka

Thanks for the withdrawal, appreciated.

I leave the general objection where it is - and suspect where it will remain.

[Andrew Bowie]

Don't even know if this is still live, and I couldn't be much later, but am I right in seeing that there is no serious mention in this discussion of the fact that student debt levels must also include what the students borrow for maintenance, on top of the fee loan? This means that debt levels are very high indeed at the end of three years, and that the debt-averse will be more likely to be put off, which is known to be an issue of social class.
I also wonder about the Russell Group defense of their world-class status being linked to undergraduate provision of teaching and teaching income: teaching quality in the humanities can be just as high in less research-intense institutions. I've worked in all areas of the sector, and know many would agree.