Monday, 11 April 2011

England's universities: uncomfortable alternatives

Well, as the fee setting continues among England's universities, the process has made the Government look deeply foolish - and foolhardy (as predicted here, of course). It's not just that politicians exhibit a really noticeable lack of knowledge about universities - as displayed today by a Prime Ministerial gaffe about the numbers of ethnic minority students at Oxford. It goes much wider than that - to a failure to really look at the alternatives before us. They might in some ways have been harder in the short run, but the narrow and winding road might have taken us to broader, more sunlit uplands in the end.

What might those alternatives have been? Well, there are only two really. The present system has many elements in common with Ed Miliband's favoured graduate tax, since it sees the Government stumping up the money to begin with, and contributions then flowing in some years for now. It just brings forward those contributions, because graduates start paying back rather more than they would under a 'simple' tax system which would see them shelling out 2-3 per cent of their taxable income for the rest of their lives. The slice of 9 per cent over 30 years is more 'front-loaded' as it were. But it's safe to say that the Cable-Willetts solution has many elements in common with a graduate tax. So I'm excluding that as an 'alternative'. Whisper it softly in both Labour and Conservative HQs!

In contradistinction to this rather messy 'centre ground', two elements might have worked rather better in the long term:

1. The 'I wouldn't start from here' solution. There is no doubt that overall state spending would be falling less quickly were Ed Balls Chancellor - at about half the rate of its present drops, if Labour's pre-election statements are taken at face value. Balls might even have wanted to reduce the pace still further. This would mean that instead of the HEFCE teaching grant falling by 60 per cent, it would have gone down by 25-30 per cent. Had Labour privileged Higher Education funding, rather than clobbering it - and many countries round the world have done just that during the present economic crisis - that figure might have been perhaps 20 per cent. That would have allowed the system as it pertained between 2003 and 2011 to have continued, albeit with a 'cap' of £4,500 - £5,000 rather than £3,350. There would have been less cost to the Exchequer, but rather more to graduates. HE numbers might have been allowed to drift up rather further if and when central government felt more generous. This is a minimum impact scenario, frightening no-one with massive change - dependent on government revenues picking up before the financial markets move in for the kill, but relatively sustainable if things go well. Certainly it wouldn't have involved a massive loss of political capital in Whitehall and Westminster, a huge controversy about access, and a big taxpayer-funded black hole (caused by ten per cent spending increases in this Parliament) that no-one knows how to fill.

2. The big bang. On the other hand, one could lift all restrictions. Yep, you read that right - just say 'okay, charge what you like, let parents pay up front without fines, subsidise loans, but not to the extent that either the 2003-2011 status quo nor the Cable-Willetts scheme promised'. While cutting state funding to the same extent as cental government is doing now. This is the much more radical option - undesirable from the point of view of most graduates and parents, who would face truly steep fees, but welcome to the taxpayer and to university Vice-Chancellors. What would have happened? Well, a real range of fees - from over £20,000 a year for Oxbridge science subjects, down to the £6,000 or so charged by some Colleges of HE. A much greater range of what universities are trying to do or aim at. More 'needs blind' admissions on the American Ivy League model, because universities charging top dollar can now afford to be more generous with bursaries and fee waivers. And the real pay-off? Higher, not lower, student numbers, because governments could then take the numbers cap off and allow any institution to recruit whomsoever they pleased. It's no wonder that this 'solution' is attracting some attention in Oxbridge Colleges right now.

Why do I spend time analysing these counterfactuals - imaginary worlds that will never transpire? As you can tell, I'm very doubtful that the second is even a runner. The answer: because they help us see what's wrong with the Coalition's strategy for England's universities, that fatal mix of massive and unparalleled government spending cuts with two funding caps, one of which is just ignored and one of which prevents new investment and new income coming in. And neither of which stops the Government tinkering around with a fragile system it just doesn't really understand.

Both 'fewer cuts' and 'big bang' would be very hard politically. And difficult to sell to voters. But the alternatives outlined here would work, at least economically. The present system won't. That's the difference.

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