Ten years ago, Coalition government heralded its reforms to English higher education funding in the context of deep cuts to public spending following the 2008 financial crisis.
Although the trebling of tuition fees to £9,000 was acknowledged as controversial, leading figures in the government proudly boasted that the new system was better overall. The then business secretary, Vince Cable (a Liberal Democrat), said that the government had “developed a package that is fairer than the present system and affordable for the nation.” The universities minister, David Willetts (a Conservative), added that it was a “progressive” reform that would “put universities’ finance on a sustainable footing with extra freedoms and less bureaucracy”.
Liberal Democrat MPs thought it was such a good deal that they willingly sacrificed their electoral credibility by voting for a system that they had promised just months earlier they would vote against. Their reward was to see their 57 MPs slashed to just eight at the 2015 general election.
The promise of a fairer, more affordable, sustainable system has unravelled within a decade. But, worse, the government was warned at the time that this would happen and chose to ignore the warnings. As the then president of the National Union of Students, I remember getting the chance to warn prime minister David Cameron and his deputy, Nick Clegg, in person, in Downing Street. Thousands of students did similarly on the streets of London but, ultimately, the government decided to press ahead, still convinced it had come up with a better deal.
This week, though, the current Conservative education secretary, Nadhim Zahawi, was scathing in his analysis of Cable and Willetts’ system. “There are some who hope we can enhance our great universities while ignoring the financial realities,” he said. This hope is a mirage...Taxpayers – most of whom have not been to university themselves – are funding 41p of every pound of student loan issued to full-time undergraduates.”
The problem is his analysis is of a higher education funding system introduced by his government less than a decade ago, which he voted for.
Two key assumptions that the government made in 2010 have proven to be the undoing of the system. First, ministers stated repeatedly at the time that £9,000 per year fees would be charged only in “exceptional circumstances”. But there was never any incentive for universities to charge anything other than the maximum. The opportunity to increase tuition fees happened at exactly the same time as the teaching budget for universities was slashed by 70 per cent. To simply stand still in financial terms, most universities needed to charge the full fee.
Moreover, price is a signal of quality. No university wanted its courses to be perceived as second-rate so, quite predictably, they virtually all rushed to charge the maximum fee. The only surprising fact was that the Department for Business, Innovation and Skills and the Treasury had been so uniquely unable to foresee this – especially when they were warned.
The government’s second disastrous assumption was that the cost of financing tuition fee loans would not count as government spending. This off-the-books accounting for loans had been tolerated prior to 2012 because the majority of higher education funding came via a government grant; the student loan was auxiliary to this. When the Coalition reforms turned student loans into universities’ primary source of teaching income, it was only a question of time before the Office for National Statistics redesignated loan write-offs as public spending. It did so in 2019. Again, the government had been warned. Again, it hadn’t listened.
So instead of creating a more affordable, fairer system, the government has ended up creating a system that is more expensive for the student/graduate and more expensive for the taxpayer. Increasingly concerned about the spiralling size of the student loan book, directly accounted for, the Treasury has been trying to find ways to unravel the system ever since George Osborne – who oversaw the 2010 reforms and followed up by uncapping student numbers – departed office in 2016.
The creation of the Augar review in 2018 was considered by many as a chance for Cameron’s successor, Theresa May, to try and understand why the Conservative Party lost votes to students and young graduates in the 2017 general election. I was never fooled. It was always an opportunity to try and reduce the amount of money government spends on higher education – and this is what is finally transpiring. Even if had taken the government three years to respond to the review and even if it hasn’t adopted Augar’s headline recommendation to cut student fees to £7,500, it has taken significant steps to claw back much more of what it lends.
The threshold at which graduates start to repay their loan is being lowered to £25,000 (from just over £27,000) and making graduates repay for 40 years (instead of the current 30 years). This is motivated by nothing other than making the system less expensive for the Treasury and more expensive for graduates. Those two false assumptions in 2010 mean that lower- and middle-earning graduates are now being expected to pay significantly more for their education.
I get no pleasure in saying “I told you so”. But, in a mature democracy, when politicians make mistakes, they need to be reminded of them. That is particularly true given the significant concerns over the new proposals already emerging, particularly the implications of the minimum entry standards, potentially excluding those who fail GCSE English or mathematics from a lifetime of higher education.
The government ought to take the time to consider whether changes need to be made this time around, too – instead of carrying on regardless again and leaving the next government to pick up the pieces.
Aaron Porter was president of the National Union of Students in 2010-11.
