Tuition fees have all but killed the Liberal Democrats. The breach of their manifesto pledge to abolish the charges, compounded by them voting for a fees increase, broke the party. Even the opportunities presented by Brexit have not revived them. In their defence, they can plead that tuition fees make fools of all parties. The Conservatives opposed them at first, then raised them to £9,000 a year. The Labour party introduced them, yet now campaigns to abolish them.
In 2018, we seem to be in for another bout of tuition-fees silliness. No. 10 is clear that Jo Johnson was moved from the universities brief in the reshuffle because he was obstructing a review of the current policy. Downing Street and the Department for Education have been at loggerheads over the issue since the party conference, when both Johnson and Justine Greening, who was pushed out in the shuffle, made clear that they didn’t think much of either the freeze in tuition fees or the plans for a review.
The official line from No. 10 is that it is committed to a review of higher education and more details will be announced soon. The expectation is that with a new ministerial team in place Downing Street will get its review. But a lengthy examination of student finance would be a mistake in political and policy terms.
Politically, you can’t get better than free. Fiddling around with the fee level or the repayment threshold isn’t going to be able to compete with Jeremy Corbyn’s commitment to junk fees altogether. A review would only help Labour by raising the salience of the issue. What No. 10 hasn’t grasped is that you can’t beat Corbyn with Miliband. Any version of the ex-Labour leader’s 2015 pledge to reduce fees won’t appeal to those seduced by Corbyn’s pledge to scrap them.
This rule applies to more issues than just tuition fees. Corbyn wants to overturn the British economic model. The difficult thing for the Tories to accept is that public opinion is with him on several issues. But the response should not be to offer Corbyn-lite. The Tories must come up with their own distinctive approach. For instance, the best way to deal with excessive executive pay is to find a way to have the true owners of the company vote on the issue. Modern technology now makes it far easier for all those who hold shares in a company via, say, pension funds to be balloted on how much its management is paid. Binding votes based on this franchise would, I suspect, bring pay into line with performance pretty quickly. By the same token, Carillion going into liquidation would be far less of a political issue if the Tories had broken up what amounts to an outsourcing oligopoly — a market dominated by a small number of players.
Tuition fees, in terms of policy, are the least worst option. They ensure that the people who benefit from a university degree contribute to the cost of it. The old system, where the taxpayer picked up the tab, was deeply unfair. After all, the average Oxbridge graduate will make £1.8 million over his or her working life. Those who leave schools without A-levels will earn more than a million less. It is hardly fair to expect them to pay for the high flyer’s advantages.
Fees have also ensured that more money has gone to universities: resources per student per degree are up by a quarter on their 2010 levels. Because the government doesn’t need to cap the number of students any more, there are now more people in university from disadvantaged backgrounds. The English system is far more progressive than Scotland’s no-fees approach: 18-year olds from a deprived background in England are more than 50 per cent more likely to go to university than their Scots contemporaries.
The current system is not perfect — far from it. The 6.1 per cent interest rate being charged is far too high. And replacing maintenance grants with loans was a mistake; it means that those from the most deprived backgrounds will leave university with more debt than everyone else, which is hardly fair.
Also, the government should introduce a mechanism to ensure that universities bear some of the costs if their alumni default on their loans. Under the current system, there is a perverse incentive to get students on £9,000-a-year courses that are cheap to teach but which might do little for the graduate’s future earnings potential. If universities had to pick up some of the tab when students can’t pay back their loans, they would think more carefully about which courses would be best for their long-term prospects. Equally, it would be better to have a greater diversity of provision in the higher-education sector. A three-year residential degree isn’t right for everyone.
I understand that the new team at the Department for Education — the Secretary of State Damian Hinds and the Universities Minister Sam Gyimah — are both ‘open minded’ on fees. But they don’t want to see any reduction in the amount of money going to universities. At No. 10, I am told, a range of opinions exists on the fees question, ranging from those who want a ‘surgical strike’ on living costs for students to those who share Theresa May’s former chief of staff Nick Timothy’s view — that the current system is nothing more than a Ponzi scheme.
When it comes to universities, the government should tread carefully. Britain’s top-performing universities are a huge advantage to this country; according to the Times Higher Education the best two universities in the world are Oxford and Cambridge, with Imperial College London also in the top ten. A successful economy after Brexit will, in part, be built on having a world-class university sector. Politicians should think twice before doing anything that could undermine that.
Labour winning 40 per cent of the general election vote under Jeremy Corbyn was a profound shock to the Tory psyche. But the answer is not for the Conservatives to offer voters a watered-down version of his prospectus. Rather, they should come up with their own solutions to the issues that are so vexing voters.
James Forsyth and Louis Coffait discuss the higher education problem on The Spectator Podcast.
James Forsyth and Louis Coiffait on the student fees dilemma.