After a landslide win last week, the new Labour administration has wasted no time in getting off the blocks. The new cabinet and ministerial teams have been announced in record time over a weekend and started to take action. This will come as a sharp shock to the civil servants in the cabinet office after what must now seem like a period of dithering and inertia. On universities and students, the changes are yet to be announced. But ‘change we can expect’ as a universities minister is resurrected from the Blair-Brown era to reset the agenda.
The incoming chancellor, Rachel Reeves spoke earlier today about the challenge facing the UK in the next five years. This was captured in one stark statement about her inheriting the,
“Worst set of circumstances since the Second World War”.
She also made it clear that there would be an autumn budget. This will be preceded by considerable work all round with a solution to university and student funding likely to figure.
With this as the backdrop, it is urgent that dithering has to stop and be replaced by bold decisive action. Everyone, including universities, colleges and students must brace themselves.
A completely new perspective.
The change in the power balance in the new government is seismic. A whole new social stratum has risen to the surface in government. The vast majority of MPs are now state school educated and the gender balance is not far from parity. This is reflected in the ministerial teams working with Keir Starmer. The fact that two of the most prominent ministerial figures, Angela Rayner and Bridget Phillipson, come from humble backgrounds epitomises the change in perspective. Gone is the blinkered view of an ‘elite’ hegemony that simply did not understand how people were living. We can expect greater understanding and more appropriate action.
Back to the future.
While some of the ministerial appointments appear to be a surprise, in retrospect they are perhaps not so surprising. The resurrection of several figures from the Blair and Brown governments probably represents a resetting of the clock in their remits. On college and university matters we might expect a return to the policies considered under Labour from 1997 onwards. This is likely to be a good thing.
The resurrection of several figures in the Blair-Brown governments must be a way to establish the links to a former time. They offer experience and a view that was lost fourteen years ago. It might also signal a return to the approach taken to universities back then. The financial constraints on universities and students now are reaching a critical level and will have to be addressed in the short term at least.
In comes Jacqui Smith as a minister in the Department of Education. Both Times Higher and FE Week have reported that she will be responsible for the skills, further and higher education brief. Elevated to the Lords at the same time, it means she will not be answering questions directly in the Commons. Instead, this will fall to her boss, Bridget Phillipson.
Smith is effectively a big gun having served as Home Secretary under Brown and schools minister under Blair. She entered parliament in 1997 and was not re-elected in 2010 after falling to the expense scandals of the time. They seem tame in comparison to recent transgressions, but will no doubt resurface.
Smith was in government when Labour first introduced university tuition fees and no doubt supported the move. However, there was considerable angst amongst those involved about the role of loans and affordability. Certainly, there were immediate student protests to mark their introduction. These look tame compared to the student riots that accompanied the full fee regime introduced later by a Conservative government. Students must be consulted more openly this time to ensure a smooth transition to a new system.
Back then, ideas such as a graduate tax were floated to pay for the fees that would enable wider access to universities. These ideas will no doubt resurface.
Solving the university funding conundrum.
In her speech to the Department of Education (reported in full in FE Week), the new Education Secretary included universities and colleges in her priorities with acknowledgement of,
“the state of university finances, the challenges that we face within further education.”
TEFS has argued for some considerable time that a sustainable funding system must be able to increase university income in line with inflation. This must happen alongside a fairer fees and loan system for students. The cost burden should be spread across those who benefit; graduates, employers and wider society. Bringing back maintenance grants for the least advantaged must be part of reform.
This could all be achieved through repayments as a graduate levy via the National Insurance system. Employers would also contribute.
See more recently from TEFS,
Ideas from an earlier administration.
The idea of using National Insurance contributions to fund student fees has been around for a while and sits alongside the idea of a graduate tax. These proposals were well known by the Blair government.
In their collection of articles in the book ‘Financing Higher Education: answers from the UK’ in 2005, leading economists Nicholas Barr and Iain Crawford made a compelling case for looking at National Insurance as a vehicle to repay loans. Going back to 1989 (taken from Nicholas Barr 1989 ‘Student loans: The next steps’, Aberdeen University Press) they explored in detail the various options under consideration. The keystone idea that the repayment of loans must be income contingent was not in doubt. They concluded that loans should be repaid via National Insurance because it was the easiest to administer and could be easily deployed. There is an assumption that this would be a contribution and grants would remain. Also, it would be unfair to ask graduates to pay more than the loan in time and there would be a repayment cap. They rightly observed that,
“The use of the National Insurance mechanism lends itself easily to an employer contribution.”
In making comparisons to contributions to the state pension, they saw this as a pension in reverse. The social contract, arising from the Welfare and Insurance Legislation between 1946 and 1948, has been embedded in our society for a long time. It is predicated upon payments by employees and employers now going into a fund that supports those who have already retired and those needing benefit support. As ‘insurance’ it does what it says on the tin. The promise is that future employers and workers will continue to pay into the fund, and so the cycle continues. However, a Graduate Levy would act like the state pension in reverse.
“The student needs access to his/her future earnings; private capital markets are not able for technical reasons to supply such loans; thus, an arrangement which uses the National Insurance mechanism is efficient. Student loans are just an upfront pension.”
With inflation creating havoc in our universities as the fee cap continues to be frozen, this mechanism would resolve the situation quickly. Fees could rise with inflation and be matched by the National Insurance Levy that tracks wage inflation.
Regulation of Further and Higher Education.
Hiding in the Labour manifesto was a promise to revise the relationship between universities and colleges 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”.
This could be a major change and might explain the appointment of Jacqui Smith. But there would need to be a unified regulation regime in place to manage this.
There is no doubt that the current regulation of universities through the Office for Students (OfS) is failing badly with 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’).
TEFS suggests that the OfS is abolished, and a new body created from scratch. This would reset the system in a radical way that might not be met kindly by the ‘elite’ universities. However, it is probably long overdue.
Out with the new and in with the old.
The replacement of Matt Western by Smith was surprising as he was generally in favour of universities and the plight of students. He replaced Emma Hardy who was in the role of shadow universities minister under Corbyn. The promise then was to abolish fees. Hardy would have backed this and no doubt was uncomfortable when no fees seemed less certain under Starmer. She resigned and with Matt Western in place, it appeared that he supported fees to some extent. However, observers might speculate that the plans in the wings are not what he supports, and he too walked.
Regardless, urgent action is needed, and it will have to be radical. Jacqui Smith is likely to be the best option for resetting the system back to what it should have been all along.
The author, Mike Larkin, retired from Queen’s University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics. He remains optimistic.