Monday, 5 September 2016

For Labour to abolish university tuition fees it needs to find the funding.

Funding for higher education has become an issue in Labour's leadership election.  Most Labour party members I talk to would like to abolish university tuition fees.

Up to the 2012/13 academic year, higher education institutions in England could charge a maximum annual fee of £3,375. This changed in 2012/13 when the cap was increased to £9,000. The vast majority of universities and courses charge the £9,000 maximum.

Now the cap has been increased to £9,000 there is some evidence that it is deterring potential students from poorer backgrounds, or at the least it is affecting the decisions poorer students make. This was always the concern.  

But, whilst there is evidence that fees may affect decisions, the doomsday predictions of a massive decline in students from poorer backgrounds has not materialised. There are now more young learners entering higher education from lower socio-economic groups than at any time before. This number continued to increase even when the cap was lifted to £9,000. But as UCAS point out 'it is likely that application rates remain a little below what they would have been if higher fees had not been introduced.’

The bottom line is that if we abolish fees altogether then we need to find funding for the universities, and that would need to come from tax revenue.  Labour should at least consider whether fees should still be a component of funding. We can't just have a wish list of state funding without knowing the costs and how they would be met.  We should at least consider whether there is a sweet level of fees that would help raise revenue without being a deterrent to poorer students entering higher education.

The expansion of universities and the numbers of students put a considerable strain on universities. There has been a huge expansion of student numbers. This is good, particularly if it is broadening access and opportunities. But it needs funding. 

Funding from fees now makes up a substantial amount (47%) of university funding. The government has systematically reduced the amount of direct funding for universities in England and Wales. One alternative would be a graduate tax, but it is not clear this would raise sufficient revenue to replace the funding from fees, or if it could be imposed fairly. The universities need funding up front, not at some time in the future when graduates start earning sufficient to pay a premium tax rate.

Those who advocate abolishing fees altogether must come up with alternative funding. We could make it a priority to increase direct funding, but it competes with the need to fund the NHS and social care. I have yet to see any real costed alternative. We need to find one.

My approach would be to systematically reduce fees over a period of years, with a gradual replacement with direct funding. It is sensible to consider  a graduate tax as a temporary measure to find such funding in the future, but the devil would be in the detail. It is also sensible to see some level of fees as part of the mix, but at a much lower cap.

If Jeremy Corbyn promises to abolish fees, then he needs to be honest about its cost, and where he will find the funding. The Universities have no faith in government commitment to increase funding. There is also a great deal of anxiety about the loss of revenue from EU students post Brexit. None of this is easy. Don't believe anyone who claims it is.

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