Liam Byrne: ‘Funding system combines worst of a free-for-all and a money pit’

The last few days have seen much speculation about Labour’s position on the financing of higher education.

We will set out our plans in due course but Ed Miliband has articulated a clear direction of travel on this: a core goal must be to bring down the levels of debt cancellation that are making the current system unsustainable.

That’s what we’ve taken from the revelations of the last two weeks - revelations that have driven a coach and horses through the government’s higher education policies and raised concerns for students, taxpayers and vice-chancellors alike.

First was the response to a Parliamentary question I tabled on student loan repayments.

It now emerges that the government expects the write-off of student loans to rise so high that the new system of £9,000 tuition fees is nearing the point at which it will cost the taxpayer more than the one it replaced.

A surge of speculation followed that student fees might have to rise higher still. In the Commons, the deputy prime minister Nick Clegg said that there was no case for such a rise, but in the TV studio David Willetts was telling a different story.

After an interview with the universities minister, Cathy Newman of Channel 4 News reported:  “As David Willetts was leaving the studio, I suggested it sounded like another tuition fees rise was on the way. ‘Could be’ was his response.”

In the Commons, Mr Clegg argued that the amount students would pay back each month was less than under the old system. He did not mention that, according to research conducted by the House of Commons Library, the average student today won’t pay their loans back for years, meaning they’ll by approaching 50 before they are free from the debt burden. In stark contrast, it was estimated that for students starting after 2006-07 the average Student Loan would take 11 years to repay for men and 16 years for women.

Last week a fresh batch of answers arrived to my parliamentary questions on the scale of taxpayer support now received by private providers. The sheer size of the subsidy surprised everyone. Nearly £1 billion of publicly-funded loans and maintenance grants are now flowing through students to private providers.

However, what really surprised me was the fact that that the government has no idea about the level of profit these private providers are now making.

In another parliamentary answer, Mr Willetts said: “The Department [for Business, Innovation and Skills] has not made an assessment of the level of profits made by for-profit alternative providers with courses of higher education that are designated for student support”.

Even worse, it turns out that the government doesn’t even check whether a college is profitable or charitable before it agrees loan support.

A further answer saw Mr Willetts admit: “In assessing students’ eligibility for student loans, [BIS] does not distinguish between those alternative learning providers that operate on a commercial for-profit basis, and those that do not. The information requested is not available.”

Just to round it off, he underlined: “The department has no plans to regulate the profitability of alternative providers with courses of higher education designated for student support.”

You heard it: no plans. None.

Together these revelations have profound implications for the future. Not so long ago, many in the university sector told me that removing the cap on student numbers into the next Parliament was a vote winner for the Tories. But now it’s clear that what is proposed is a system that combines the worst aspects of a free-for-all and a money pit.

It may not be a fashionable view, but I believe public universities do a brilliant job. The system of higher education that emerged in the 1960s, with a national admissions system and a national grant regime ensured that today we enjoy world-class university system.

It’s diverse, it’s competitive in a way that encourages innovation in research and teaching, it recognises the public benefit of higher education, and it delivers high standards. It’s also highly efficient. We should be very proud of it.

What is not clear to me, however, is how it is good for public universities to maintain a system where half of the new money earmarked for expansion is locked up in an a third-party account to provide for loan write-offs, and where there is zero control of how much is creamed-off in profit by a hungry private sector. I look forward to hearing the arguments in favour.

With this is mind, it’s very welcome that Universities UK is grasping the nettle and seeking to maximise cross-party consensus on a new way forward. I very much look forward to joining those talks and, to help kick-start the conversation, I plan to set out the principles which I think should guide us. These will be principles deeply rooted in our history and academic traditions, but more importantly they’ll give us a sense of the future in a world turning East - a world where technology is moving faster than ever, and where we in Britain need new answers to help us, collectively, to earn our way to a better standard of living.

It won’t be Robbins Revisited.  It will be Robbins Rebooted.  

Let the debate commence.​