The UK government’s Augar response locks in deep generational inequality

Speaking to Parliament on Thursday, England’s secretary of state for education, Nadhim Zahawi, outlined three aspirations of the government’s response to the Augar review of English post-18 education and funding. First was “to ensure that our universities are on a solid footing and sustainable ground for generations to come”. Second was to “secure a better deal for the student and [third] the taxpayer”.

We should always allow politicians rhetorical leeway. Since time immemorial, it has been an article of faith that new policy proposals are good for everyone and that through political acuity and deep negotiation, difficult tensions have been resolved. But the fact is that there are always stark strategic choices to be made. It is by no means clear that the government’s proposal to freeze tuition fees for the rest of this Parliament, at a time of high inflation, will “ensure that our universities are on a solid footing and sustainable ground for generations to come”. My guess is that soon after the next general election, this (or another) secretary of state will be undertaking a fundamental review of higher education financing.

But that is not the big story from the higher education funding reforms this week. The big story is that, as Martin Lewis of Money Saving Expert points out, going to university has just become a lot more expensive. Put differently, the strategic choice has been made to worsen the offer for future students and graduates. Put differently again, the choice has been made to put the interests of current taxpayers ahead of future taxpayers. What we have is something that deepens already profound generational inequality.

Most of the people who will read this article were educated at a time when the offer to students and graduates was far, far better than it will be for students who start their courses in 2023 and later. In the baby boomers’ era, local authorities paid tuition fees, and students were entitled to a means-tested maintenance grant. Much professional training was fully funded. In their first jobs, graduates earned enough to get a mortgage, which attracted tax relief. They were typically enrolled in a final-salary pension scheme. It’s a world away from the offer to students who begin their courses next year. You can argue – and I’ll agree with you – that the offer for that previous generation was too generous, but that should not detract from just how much things have changed.

Students who enrol at English universities under the government’s current proposals will repay their student loans over 40 years instead of the current 30: in other words, over their entire working life. Those loans will continue to come with one of the obvious injustices of the current system: that the interest accrues not from graduation but from the beginning of their course. And the government has ignored – it does not even refer to – the conclusion of Philip Augar’s 2019 report that the abolition of maintenance grants for poorer students has not worked and should be reversed.

The government’s own briefing argues that no graduate would pay more than £13 a week higher in loan payments than under current arrangements – but £13 a week is a lot of money when you are setting out in life, particularly when you throw in a cost-of-living crisis resulting from rising inflation and national insurance. Early analysis by the Institute for Fiscal Studies suggests that it’s an even worse deal for women and for students from disadvantaged backgrounds in the north, where graduate salaries are lower.

Future graduates will begin paying back their loans at a lower income threshold (£25,000) than students who began their courses just a year before them (£27,295). If they are very fortunate and proceed to very highly paid work quickly, as a minority of largely socially advantaged graduates do, they will, even in this more stringent regime, pay back their loans before their own children confront the costs of progressing to higher education. But most graduates will be paying off student loans for four decades. This is yet another ramping-up of the generational unfairness that a previous Conservative minister for higher education, David Willetts, mapped so clearly in his book The Pinch.

The government will contend that this was necessary because the costs of the student loan regime have become “unsustainable”. It is probably also true that the Treasury demanded its price before it would agree funding for newer initiatives, such as the lifelong loan entitlement – which, from 2025, will entitle everyone in England to four years’ worth of student loans over their lifetime.

But other societies fund their higher education in a range of ways, and few of them with the loaded generational unfairness that seems to be locked in now. A different approach would look at the social and, yes, economic benefits that flow from a highly educated graduate workforce: we know that graduates, irrespective of earnings, make fewer demands on health and social welfare systems, for instance.

A different approach would – as happened between 1996 and 1998, when Gillian Shephard was secretary of state – build a cross-party political consensus on a long-term vision for higher education’s role in society and how that might be funded.

A different approach would recognise more clearly that universities, students and taxpayers are not three different groups. They are three overlapping and interlocking parts of society, who need each other.

Sir Chris Husbands is vice-chancellor of Sheffield Hallam University.