The vigour of this week’s protests about the planned increase in university fees seemed to come as a surprise in many quarters. I am amazed at this surprise, which suggests a complete lack of understanding at the top of government about the impact, out there in the real world, of what is being proposed. Having heaped much of the burden of public expenditure reduction on the poor through benefit cuts, the coalition government is now likely to alienate both the poor and the middle classes at the same time through student fees.
Firstly the poor. I was part of that generation who came from a working-class background but gained entry to university through free student tuition, something I would not otherwise have been able to do. Remember the famous speech by Neil Kinnock some years ago ‘Why am I the first in a generation to go to university’?. One has to come from that background to understand the psychological barriers that students from poor families face when taking on student loans at any level let alone £9,000 per annum. It is no good economists harping on about the financial return to be gained by graduates from their studies (even if there is still such a return) since such students, because of their impoverished backgrounds, will worry about leaving university with a £5,000 loan let alone £50,000.
Secondly the middle classes. Many such parents were probably resigned to a bit of financial austerity to deal with the fiscal crisis. However, they never realised it might impact on their children in such a devastating way. They will now either be panicking about saving enough to put their children through university at much higher fee rates or be resigned to and upset by the fact that the children will have substantial 30-year debts to deal with on top of mortgages and sub-standard pensions.
Colin Talbot quite correctly pointed out in an earlier blog this week that it is naïve to think that increases in fees of this magnitude can take place without any impact on demand. If that were the case then university education in the UK would be one of the most price inelastic commodities ever known to humanity.
Furthermore, there is another issue about whether all universities will raise their fees to the same level (ie the level of the cap) or whether competition will drive down fees. Earlier experience suggests all universities will adopt the same level of fees and this is, in part, another issue of market failure. The level of fees a university charges is often seen by teachers, students, parents and universities themselves as a surrogate for quality. Lower fees mean lower quality not a bargain. Why cut your own throat?
The irony of all this is that there was a perfectly acceptable and workable funding policy (originally supported by Vince Cable) that had a broad consensus of support. This was the graduate tax. Look at it this way – the state invests (at some risk) in your higher education by providing you with free up-front education. The state subsequently takes a return on that investment linked to how well you do in the job market. The better you do the more you get and the more the state gets. Forget all the waffle about students who disappear abroad and don’t pay the tax – that is a side issue. The real opposition to a graduate tax came from the right wing of the Tory Party who wouldn’t support any form of additional taxation even one which is effectively hypothecated to universities.
So could student fees be the coalition’s poll tax? The poll tax was an example of a political shot in the foot that didn’t need to happen and which caused the demise of Margaret Thatcher. The student fees issue affects so many people that I suspect opposition to it will grow as more and more people understand its impact on them and their children and the fact that there was a fairer and workable alternative available. I really wouldn’t like to be a Liberal Democrat campaigner on the streets of Oldham East and Saddleworth trying to justify this one to the people of that constituency.
Moreover it could now become the conduit for much wider public protests against other coalition policies that are seen as distinctly partisan and unfair. Let’s keep a close eye on the opinion polls.
Malcolm Prowle is professor of business performance at Nottingham Business School. He is co-author of Financial Management and Control in Higher Education and has worked as a consultant for the Department for Education, higher education funding councils and many universities
