If I was the ‘responsible’ government minister and not just a mere media commentator on higher education, what would my politically sensible solution be to calls to increase tuition fees to help solve the funding crisis facing universities?
Given the torrid history surrounding increasing higher education tuition fees why would Labour Prime Minister Sir Keir Starmer and his ‘Iron Chancellor’ Rachel Reeves risk upsetting a key section of supporters with even a modest rise of say £500 or £600, as some policy wonks have suggested?
Vice-chancellors and higher education stakeholders claim that without such an increase, the first rise in domestic tuition fees since 2017, several universities face imminent financial collapse and point to scores of higher education institutions cutting courses and making staff redundant, endangering quality and damaging one of the UK’s best “export industries”.
But hang on, weren’t the stormy protests by thousands of angry students before the David Cameron-Nick Clegg coalition government managed to get a narrow majority of MPs in December 2010 to vote in favour of trebling university tuition fees to £9,000, from 2012, enough of a warning to the new Labour government to tread carefully.
Remember Nick Clegg’s U-turn
Remember how students got their revenge for the massive U-turn by Liberal Democrat leader Nick Clegg, who campaigned on a platform to scrap fees only to sell his principles in exchange for seats in the Conservative-led Cameron coalition government.
The number of Lib Dem MPs at the next general election in 2015 went down from 57 to 8 and it took them nearly a decade to recover. And that was only thanks the nationwide swing against the Conservatives and tactical voting to get the Tories out on 4 July 2024.
So, if I was the Universities Minister instead of Baroness (Jacqui) Smith, why would I press my colleagues in government for a fee rise and upset the very people Labour relied on for the party’s landslide in winning 411 parliamentary seats at this year’s general election?
The new government has already ‘peed-off’ most pensioners by axing the winter fuel allowance, but perhaps the thinking goes that as the one group which stuck by Rishi Sunak’s Tories at the last general election, they are a lost cause.
Students and the young on the other hand are right at the core of Labour’s slimline support base, which despite giving Starmer a thumping majority in parliament is actually spread pretty thinly around the country.
Fees frozen for 7 years
So, as someone who was against trebling the fees back in 2010 (like most Labour MPs), let’s assume that as Minister of Higher Education (in my dreams, or nightmare) that I accept vice-chancellors are not bluffing about some of them being close to the financial edge as a result of domestic tuition fees being frozen at £9,250 for the last 7 years.
And that I understood the gravy train of ever-increasing fees from an ever-increasing number of international students is likely coming to an end with a slump in overseas student numbers this autumn.
Of course, Labour should continue sounding nicer to international students than the Tories (which isn’t hard), but without overturning the ban on master’s students bringing dependants, the numbers may not recover any time soon from countries like India.
And Labour is committed to bringing down net migration figures, so reversing the ban could be tricky following the anti-immigration riots this summer.
A major review
The obvious place to start is to do something like the Australian Labor government’s Accord major review into the future of tertiary education to kick the issue of finding a sustainable future into the long grass for a year or so.
Trouble with that is that will take a year or two to get right and we need a solution sooner rather than later to the immediate financial crisis facing both students and universities and it is already too late to hike fees for the academic year starting in a few weeks-time.
It obviously helps that Keir Starmer has been pretty clear that he has ditched former Labour leader Jeremy Corbyn’s free tuition pledge and got the U-turn done and dusted before the General Election to give Labour room for manoeuvre in power.
Let’s also consider what Bridget Phillipson, Labour’s Secretary of State for Education, has said on fees and funding. On several occasions, she has told various media that a tuition fees increase in England would be “unpalatable”. But she hasn’t ruled it out!
And, we know it is probably not worth asking Rachel Reeves for more money for a bail-out as the Chancellor says she hasn’t got any spare cash for anything at the moment!
Confusion over income-contingent loans
So, let’s start by trying to clear up the confusion caused by Robert Halfon, the previous Tory minister for higher education, and others, who suggested that not increasing tuition fees helps students currently struggling with the cost of living crisis.
It doesn’t because what’s really hurting students is not the tuition fees they pay back later if they land a half decent job, but the totally inadequate maintenance support they receive while studying for their degree.
Remember tuition fees and maintenance support is made available through government-backed student loans while students are actually studying. These are only repayable once they graduate and earn above a certain amount.
Perhaps Labour should be clearer that what is really important is re-introducing maintenance grants to help poorer students with living and housing costs during their university years.
The level of tuition fees is far less important to most students than it is for universities which rely on the tuition fees for teaching and many other expenses.
Level repayments start is important
What’s important for graduates is the salary level that repayments kick-in, and the interest attached to loan repayments, and how long they have to pay off the borrowed money and whether 9% is the right percentage for what seems like a ‘graduate burden’ on top of income tax.
The Conservative government moved the earnings level that graduates start repaying their student loan (which covers tuition fee and maintenance) from £27,295 to £25,000 for those starting their degrees last year.
Graduates will now have to repay the student loans at 9% on everything they earn above £25,000 and the Tories also added ten years to the repayment period, from 30 to 40 years, before any outstanding amount is written-off.
So as a first step, I’d recommend returning to £27,295 before any repayment start to help those on lower salaries.
I’d also argue that any unpaid part of the loan is written-off after 30 years to avoid many graduates still paying back the student loan as they enter pension age.
But the key plank of the current system would remain, at least while the big review takes place to look at alternatives to the student loan system, which some pundits have likened to a ‘Frankenstein monster’ because it benefits richer graduates and means nurses and teachers pay back more than bankers.
See my piece for University World News on one possible alternative, a stepped repayment scheme put forward by London Economics last year, which while a bit complicated is more progressive in terms of who pays and how much.
Wealthiest would pay more
For the majority of graduates at the moment, it doesn’t really matter what they owe the Student Loans Company as they probably won’t pay off the loan in full before it is written-off. However, increasing tuition fee would mean the wealthiest would pay more.
Back in 2010, when I worked in higher education, I remember one vice-chancellor trying to convince me that trebling tuition fees to £9,000 wouldn’t harm access and widening participation among local students.
His argument was that even if the tuition fees went up to £20,000 or even £30,000-a-year, the ‘income-contingent’ loan system meant only the richest paid back the loan in full. And the very wealthiest often pay the tuition fee upfront and don’t need to take out a maintenance loan.
So, could a Labour Universities Minister win an argument that tuition fees should be increased – and not just by a token £500 or £600 to help vice-chancellors pay their wage bills and other running costs?
Do we need a bigger increase in tuition to allow Labour to re-introduce maintenance grants and help less-wealthy students struggling to pay their rents?
Tuition fee of £12,000?
Why not increase the tuition fee to say £12,000 and legislate that it should rise with the rate of inflation every year to avoid the mistakes of the previous Conservative governments in needing a vote in parliament before the fee goes up, which proved too politically risky to try more than once?
The extra cash could help both the struggling universities in the short-term and struggling students in the longer-term.
It could also provide extra funding to help higher education meet some of Labour’s key missions, such as rebuilding the National Health Service by re-introducing bursaries for nursing students and other future NHS workers, such as physiotherapists and occupational therapists.
And it could provide extra financial support for those opting to retrain to help Labour’s goal of an employing extra 6,500 school teachers?
Sure, it would probably cause a storm – and Tory and Lib Dem MPs would probably replay the political dramas of 2010, only with Conservatives this time pretending to have the interests of poorer students at heart when they would really be horrified that the sons and daughters of more wealthy families would have to pay more to go to university.
Political punch-up
Whether I agree with tuition fees or not (and I would prefer we kept Tony Blair’s system, where students paid something like a third (£3,000) and the State picked up the rest (£6,000), we are in a different world.
As the make-believe Universities Minister (and not me the blogger-writer), I would be asking the Cabinet whether it is worth having a political punch-up over increasing tuition fees by £500 or £600 and keep them under the “presentationally difficult £10,000”, as Mark Leach put it. That wouldn’t be enough to solve anything except the immediate cash crisis facing universities?
Far better to find a solution that would allow a year or two for a proper review and implementation of a more sustainable funding system for both students and graduates, as well as well as higher education institutions, and maintain the country’s reputation for excellence in higher education.
So, that’s what I think I would be arguing if I was actually the Minister for Higher Education and having to face tough choices.
Fortunately, I can wake-up from my dream (or nightmare) and return to being just a humble scribe and a critical observer instead of trying to run the country’s higher education system.
What a relief to avoid the responsibility!
- Featured photograph shows Keir Starmer with Labour’s Chancellor of the Exchequer, Rachel Reeves. Image: Labour Party. Other pictures from University of Leeds and UK government.
