Tuesday, 26 February 2013

English universities: the ongoing funding debacle

The ongoing debacle of English higher education funding is like watching a man trying to cross a road made only of banana skins. In slow motion. Wearing ice skates. You get the idea.

There's some bright spots amidst the gloom, of course - and David Willetts (above), the Higher Education Minister, will happily take credit for if he can. Applications are up this year, after last year's huge slump. Students deferred going, worrying about the costs; some delayed their gap years. Now slightly more are taking the plunge. Numbers won't cave in. But that was never the real worry anyway, for the demand and aspiration to go to university leaves thousands hammering on the doors, unable to gain a place: they'll be no empty seminar rooms any time soon.

No. That wasn't the problem. Rather it was the fact that this administration's leaky old set of Heath Robinson compromises bids fair to bankrupt the entire system. By allowing university costs to rise, and paying for that up-front, the Treasury moved student funding off the balance sheets showing a still-deteriorating deficit. But that can't hide the fact that it'll cost the Exchequer more than the old system for at least a decade.

Here's the technical stuff: the rate of return on the Government's loan money is still sinking. It's likely to sink further. They used to say they'd 68 per cent of the cash back. Now they say 66 per cent. Later they'll say more like 60 per cent - as predicted here all along - and then impose further cuts to pay for their own lack of foresight. Students will move out of the country; others will disappear; more will earn low wages than thought, and pay back less.

Want to know how this can turn out in practice? Look to New Zealand, where huge numbers of students disappear off to Australia after graduating - leaving governments there with the massive headache that they might never see the majority of the cash they've given out ever again. The student loan debt mountain now stands at something like £6-7bn, with £200m of that in arrears.

Who really thinks that Whitehall and Westminster will avoid the same fate? Anyone? No hands up. I didn't think so.

The Government has created a system that will cost both the taxpayer and the student more - without delivering many appreciable improvements in productivity and performance. It's a rum old deal, policymaking.

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