At first sight the manifesto offering was tepid on student and university finance. This is indeed surprising given public statements made by the shadow education secretary and the shadow universities minister in the last year. However, there are encouraging statements scattered amongst the text that hint at big changes afoot. This ‘bold’ move to say virtually nothing on funding has disappointed many. But with universities and students in the wings there may be an opportunity to work for real ‘change’ even within the stringent fiscal rule. A bold review of Higher Education must be in the wings ready to enter centre stage in a comprehensive spending review in 2025. Everyone must brace themselves for ‘change’.
The emphasis of the Labour manifesto is economic growth as a route to improve peoples’ lives in the UK. This is billed with the simple title ‘Change’. The title is a more succinct version of the 2019 manifesto ‘It’s time for real change’ but there the resemblance ends. The 2024 version is very different after the UK economy has taken a battering from Covid, the Ukraine conflict, corruption, misspending, and topped by a self-inflicted economic implosion. The result is that any new government must now adhere to a ‘Fiscal Rule’ and its inherent ‘Fiscal Targets’ to weather the aftershocks. It will not be a smooth ride. On universities there is a stark statement and challenge,
‘Higher education is in crisis’.
University funding.
There are clear aims and promises in the manifesto. These are all predicated on the assertion that,
“Labour will continue to support the aspiration of every person who meets the requirements and wants to go to university”.
However, the means to fund these are not apparent in the balance sheet set out in its ‘Fiscal Plan’ that shows new revenue and reallocations between departments. The assumption is that any changes to the financing of higher education must work within existing budgets. That may be a big ask since previous statements (see also what was said in the past below) made it clear that,
“Reworking the present system gives scope for a month-on-month tax cut for graduates, putting money back in people’s pockets when they most need it”
This implies that more students should enter higher education and put even more pressure on budgets. Previous statements (see ‘what was said in the recent past’ below) have indicated that,
“We will build on the legacy of the last Labour government’s target for 50% of young people to go to university”
There is a promise to work with universities on this and therein lies a window of opportunity for rational debate to replace the prevailing open conflict between universities and the government.
“The current higher education funding settlement does not work for the taxpayer, universities, staff, or students. Labour will act to create a secure future for higher education and the opportunities it creates across the UK. We will work with universities to deliver for students and our economy”.
It is hoped that students and employers would be involved in working through a new system that distributes the repayment between the beneficiaries and not falling on the shoulders of students alone.
Balancing the books.
If an incoming government is to achieve its objective of funding universities at the right level and cut tax/loan repayments for an increasing number of students, then it would appear to be an impossible task. If fees were to rise, as they must do, then repayments would rise for students under the current system. The crisis in universities is mounting and they are crying out for stability so they can plan not panic.
But there is a way out. Simply redistributing the burden across graduates, graduate employers and the general taxpayer would lower the cost for a student whilst making room for fee rises. These three represent the beneficiaries of higher education and it is fair that each should pay their share. Models such as a graduate tax on graduate employees and employers might seem attractive.
TEFS has looked closely at the simplest option that could be introduced quickly. This is a ‘National Insurance Graduate Levy’ that is inherently index linked. It simply protects universities from inflation pressures as it tracks pay inflation of graduates. TEFS has advocated this for some time and explored the advantages (see latest post TEFS 5th June 2024 ‘Funding students and universities and the election vacuum: addressing an urgent need with a National Insurance Graduate Levy’).
This would have progressive taxation built in and would not represent a ‘new tax’ as it is simply redistribution the current student loan repayments. It would work within the ‘social contract’ like a reverse state pension (TEFS overview). It could be done quickly through consultation with universities, students and employers. TEFS would expect to see this built into a comprehensive spending review and starting in 2025. It would stabilise a rocky system and help all in planning across students, universities and employers.
What was said in the recent past.
On fees for students in the run up to the election campaign, Labour have modelled various scenarios but are determined to keep their powder dry. However, there have been some big hints. The biggest came from the Shadow Education Secretary, Bridget Phillipson in an interview with Laura Kuenssberg on 7th January this year (below). The clear inference is that a ‘no fees’ plan is not being considered and a more progressive payment system would be introduced. The expanding problem of students having to spend more time in jobs would be also addressed.
Last month Labour released its ‘Full draft policy platform’ intended as a basis for a fuller manifesto. In addition to giving a “genuine choice of further and higher education” and encouraging wider access is a promise to,
“Reform broken tuition fees system for university funding, ensuring that people from every background and all parts of our country have the opportunity to study at Britain’s world-class universities”.
Clearly, we expected a change that builds upon the ‘Let’s get Britian’s Future Back’ document arising from the Labour conference last year and circulated to all candidates. This promised,
“Labour will reform this system to make it fairer and ensure we support the aspiration to go to university. Many proposals have been put forward for how the government could make the system fairer and more progressive, including modelling showing that the government could reduce the monthly repayments for every single new graduate without adding a penny to government borrowing or general taxation. Reworking the present system gives scope for a month-on-month tax cut for graduates, putting money back in people’s pockets when they most need it. For young graduates this is a fairer system, which will improve their security at the start of their working lives and as they bring up families.”
The question of student numbers is also expected to be far more aspirational as we expect the system is to be expanded with,
“We will build on the legacy of the last Labour government’s target for 50% of young people to go to university to reverse the trend of declining numbers of adults participating in education and training. We’ll press on and ensure that the ambition for any young person to pursue higher education, regardless of background or geography, is realised”.
Social mobility and skills.
Significant changes are afoot across the whole of the education system under the banner ’Breaking down barriers to opportunity’.
“Labour will transform our education system so that young people get the opportunities they deserve.”
But this must dovetail with the assertion that,
“Skills shortages are widespread. Young people have been left without the opportunities they need. The result is an economy without the necessary skills, nor any plan for the skills needs of the future. Labour will address this by bringing forward a comprehensive strategy for post‐16 education”.
This would have significant implications for university access across the board and would resolve the mess created by the current government. Replacing BTECs with T-levels then signalling the scrapping of both, before T-levels are fully introduced in favour of a baccalaureate, has generated absolute planning chaos in both sectors.
Regulation across Further and Higher Education.
There is no doubt that the regulation of universities through the Office for Students (OfS) is failing badly. There is near open conflict between the OfS and students and universities (see TEFS 5th October 2023 ‘End of term report: the Office for Students must do better’). We can expect major changes. TEFS suggests that the OfS is abolished, and a new body created from scratch. The manifesto hints at something that crosses both sectors with,
“We recognise that UK higher education creates opportunity, is a world-leading sector in our economy, and supports local communities. To better integrate further and higher education, and ensure high-quality teaching, Labour’s post-16 skills strategy will set out the role for different providers, and how students can move between institutions, as well as strengthening regulation. We will act to improve access to universities and raise teaching standards”.
Bold changes coming.
Everyone in the education sector can expect change and reorganisation. But the caveat is it will happen within existing spending. It’s a bold challenge for the government and even more so for the sector. However, it is hoped that ‘change’ in Higher Education will be embraced as an opportunity by students, universities and colleges, and employers alike.
The author, Mike Larkin, retired from Queen’s University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics.