Higher education, fees loans, and the Labour conference

Student protests rocked the government in 2010: are we going to see the same in 2021?

After the dust settled on the Labour Conference in Brighton this week, we are reflecting on what happened.  Most media outlets focussed their attention on divisions in the party between those trying to occupy the pragmatic centre ground and those seeking a hard socialist agenda for government. Yet this tended to overshadow radical changes in the party and in proposals that will form the basis of a manifesto for an election that may be as early as 2023. For some, this means considering what was missing at the conference. Higher Education, widening access, fairness and effective social mobility were not at the forefront. This included higher education policy, its costs, fees, and loans.  The assumption is still that the existing policy of no fees is retained from the 2019 manifesto.  The cost of this is a major issue and should be open to debate. Leaked government plans to increase loan repayments are a hot topic now and are likely to trigger fierce opposition from students and graduates alike. This has the potential to match the protests about fee increases that turned violent in 2010. The idea of ‘levelling up’ could end up on the bonfire graduate protesters make. However, the Labour leadership might be wise to wait to see what the Conservative government will actually announce at the Conservative conference next week and when they reveal the spending review on the 27th of October.

Keir Starmer’s speech on Wednesday was wide-ranging and impressive. The complete text is here. It galvanised the delegates who represent constituency labour party activists across the UK. The media coverage, especially the BBC, stressed the length of the speech at 90 minutes and the heckling and dissent from the hall. Yet the speech was originally timed at under sixty minutes and the added thirty minutes were spent wating for applause to die down. The heckling was very limited and confined to around half a dozen in a small group who held up red cards. That added very little to the proceedings or its length.

Education in general featured as a prominent issue with a Labour pledge to “make a priority of getting this country ready for work”. This emphasis was hammered home with a need for “practical life skills” and “digital literacy”.  However, this was largely confined to compulsory education in schools and the widening gap between those with and those without as the “attainment gap between rich and poor grew” in the pandemic. With the scandal that “forty per cent of young people leave compulsory education without essential qualifications”, Starmer announced that “Labour will launch the most ambitious school improvement plan in a generation”.  This is likely to attract many voters as he condemned the Conservative slogans with “If you can’t level up our children. You’re not serious about levelling up at all.” This would be reinforced by ending the charitable tax status of independent schools and attract many voters fed up with the widening advantage gap. Although echoing the priorities of the last Labour administration with “Education is so important I am tempted to say it three times”, he fell short on the issue of social mobility and higher education. The thorny issues of student fees and loan repayments were missing.

Higher education, loans, and fees.

These are likely to become a major battle ground between the government and young people in the coming months. It is therefore odd that Keir Starmer’s speech, and much of the proceedings, shied away from the difficult topic of how to fund universities and provide a fair offering for students. In doing this, there was an avoidance of a very hot topic of repaying student loans. The problem of a low rate of repayment of student fee and maintenance loans is beginning to worry government. The RAB charge, now running at almost 54%, is beginning to mount and costing the government nearly £10 billion each year.   The solution leaked by the government appears to be to make more graduates pay back the loans earlier by reducing the earnings threshold from the current £27,295 to anything between £20,000 and £23,000.  This would have the effect of hitting the low paid harder without impacting those on higher earnings. On top of increases in national Insurance, this will be hard to take as the marginal taxation rate soars to well over 50% for the lowest paid young graduates. Modelling by the Institute for Fiscal Studies concluded that it was “impossible for the Chancellor to save money without hitting graduates with average earnings more than those with the highest earnings”. This is a harsh lesson for students aspiring to cash in on education at the highest level.

Avoiding a trap.

The leaks surrounding the Conservative government plans for reducing the burden of student loans on the exchequer flew around as Labour convened its conference.

It started in the Financial Times on 26th September with “No 10 plans to lower salary level at which graduates start repaying loans”  They expected an earnings  threshold cut to £23,000. This would also  fit with the findings of the  Augar review in 2019. However, others would see this going further. In June the Higher Education Policy Institute (HEPI) suggested a cut to £19,390 would be the most effective way of reducing the costs to the taxpayer from 54% to 33%. Extending the period of the loan would improve this further. The belief in this as a ‘solution’ was further reinforced in a HEPI report on Thursday, ‘Boosting higher education while cutting public spending’, by David Willetts, who introduced the idea of the current scheme as Higher Education Minister back in 2010. He advocates a return to an earnings threshold of £21,000.

The timing of these ‘revelations’ smelled very fishy. Either the Conservatives were trying to pick a fight, or they were setting a trap. The idea that the earnings threshold for graduates could be radically reduced may simply be just that, an idea. It may be put out there to ‘test the water’ on the likely opposition and to set a trap for Labour. In the end, Labour might have been wise to avoid walking straight into it.

Outcry over proposals for a lower student loan repayment threshold.

Cutting the graduate earnings threshold would save the government as much as £2bn a year but would hit lower earners the hardest (The Guardian 27th September 2021). However, there could be a terrible sting in the tail. The change could be made in retrospect despite Augar concluding this would not a good idea. Martin Lewis of the ‘Money Saving Expert’ set out further his ongoing opposition to this on Monday in ‘Student loan costs may rise £400/yr’. The response from the treasury to this prospect was “We do not comment on speculation in the run up to fiscal events.”  Presumably all will be clearer on the 27th of October when the next ‘Economic and Fiscal Outlook’ report is released by the Office for Budget Responsibility.

Will existing Labour policy on fees and loans prevail?

You have to look to the fringes to glean any insight into this crucial issue. The Shadow Education Secretary, Kate Green, spoke at the conference on education and, like Keir Starmer, she avoided student loans and higher education in general. The full text is here in FE Week. However, she could hardly avoid the issue when confronted by delegates at a fringe meeting organised by the University and College Union (UCU).  Under the topic ‘Against the market: Public education after the pandemic’ she said, “Universities are seen as the jewel in our crown, and they are, but that cannot be built on the backs of exploiting staff”.  Critically she also went onto commit Labour to “abolishing the tuition fees system and replacing it with a sustainable funding model”.  The question then arises about if this might be a change from the existing Labour policy on the abolition of fees.

This goes back to the Labour Manifesto at the 2019 election that was a disaster for Labour and saw the Conservatives sweep in with a massive majority, so great that Labour have been unable to mount any effective opposition under a more pragmatic leader. In it was the pledge to “create a National Education Service to provide support and opportunity throughout your life: from Sure Start centres to top-quality early years education; well-funded schools with lower class sizes to free university”. Stressed further for students were “tuition with no fees; and free lifelong learning, giving you the chance to reskill throughout your life”. These were bold pledges and likely to look unaffordable to most of the electorate.

The conclusion is there is a major storm brewing. However, it will not be long before we see if the Conservative government has the audacity to make costly and dramatic changes to fees and loans.  They may be about to throw their levelling up agenda onto the bonfire that students and graduates are preparing for them.  Labour are probably waiting in the shadows with a better alternative.

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