Analysis: Lord Browne’s tuition fees review
Lord Browne’s review into higher education funding: What does it mean for you? And what does it mean for the coalition?
By Ian Dunt
Background
Universities are one of Britain’s success stories. The UK as a whole is the second most popular destination for international students, after the United States. Cambridge and Oxford speak for themselves, but four of our universities are in the global top 20 and 15 of them are in the top 100. Forty-five per cent of young people go into higher education in Britain, something most countries dream of.
But things are not well. There is a consensus across the political spectrum that university funding needs reform. The state is still paying extraordinary amounts funding the sector and universities are crying out to charge more so they can compete with international rivals. Analysts worry that without reform, Britain’s status will quickly slip. The number of young people from disadvantaged backgrounds going to university remains stubbornly low. While more people are going to university, the kind of people going remains pretty much the same. Successful applications from students who qualified for free school meals are particularly disappointing.
The Browne report held four days of public hearings, questioned 36 witnesses, received over 150 submissions from academics, universities, colleges, student groups, parents and businesses, and visited 13 higher education institutions.
The politics
The politics behind university funding reform has a confused and slippery history. Labour introduced tuition fees, and commissioned the Browne review. It is now opposed to any rise in tuition fees and would rather have them replaced by a graduate tax. We’ll come back to the graduate tax in a moment.
The Tories originally wanted to scrap tuition fees, but will now back getting rid of the cap altogether. The Liberal Democrats relied on their opposition to tuition fees to secure the student vote and all the party’s MPs pledged not to allow them to rise. They now appear to be edging closer to accepting the Browne report, although you should expect several of their MPs to rebel or at least abstain. In a charming twist of fate, the department which would oversee the implementation of the review is one of the few controlled by a Lib Dem: Vince Cable.
If the Tories can keep Lib Dem ministers on side, they will win the vote, which could take place before Christmas. If the Lib Dems abstain en masse, the government will be at the mercy of Labour, smaller parties and Lib Dem rebels. It would also be the first chink of doubt in the coherence of the coalition. Many Lib Dem MPs believe they can secure important changes by campaigning over the next few weeks.
Tony Blair wrote in his recent memoirs that he came closest to losing his job not over Iraq, but on tuition fees, where he narrowly scrapped a vote after Gordon Brown called off his attack. The issue is a dangerous one for politicians and the Browne report was supposed to deliver sustainability above all else. Once it’s done, they don’t want to return to the issue for a long, long time.
There is almost no support for a return to the pre-tuition fees days.
Two distinct intellectual arguments secured that view. One, that those who benefit financially from going to university should not be subsidised by lower income workers through their taxes. Recent OECD research, for instance, shows that in the UK the benefits of higher education to the individual are, on average, over 50% higher than the public benefits. It seems unfair to make people pay for the good fortune of high earners.
Two, access to university is determined by aptitude – the passing of exams and course work. It is qualitatively different to something like an A&E department. Given that some people are therefore technically barred from using the service, there’s no reason they should also be forced to pay for it.
Price and payment
Lord Browne suggests scrapping the cap on tuition fees altogether. This is more radical than we expected. Up until the weekend, it was felt that he would double the current cap to £7,000. Top flight universities such as those in the Russell Group, and in particular Oxbridge, are expected to suddenly raise their fees substantially.
They’ll have to take steps to justify themselves though. Institutions charging more than £6,000 per year will have a tapered levy slapped on them to ensure they contribute more to supporting the poorest students. They will also have to demonstrate to the regulator and their students improved standards of teaching and fair admission.
The review was careful to introduce progressive elements, though. Students will pay nothing up front. The repayments only start when they earn over £21,000 – well above the current £15,000 threshold. Even then, they start slow, at nine per cent of income. If their earnings drop down again, the payments stop. If they stop working, the payments stop. Once the cost of the course are repaid, the payments stop. After 30 years, regardless of circumstance, the payments stop.
Someone earning £25,000 would pay £30 a month. Someone earning £60,000 would pay £293 a month. Lord Browne said the bottom 20% of earners will pay less than today and only the top 40% of earners will pay back close to the full amount.
The payment threshold will be reviewed regularly to bring it into line with growth in earnings.
Students on a high salary will pay a real interest rate, equal to the government’s cost of borrowing (inflation plus 2.2%). Students earning below the repayment threshold will pay no real interest rate. Their loan balance will increase only in line with inflation. Those earning marginally above the threshold whose payments do not cover the costs of the real interest will have the rest of the interest rebated to them by government.
Lord Browne made simplification of the system a cornerstone of his proposals. This is something of a trend in government. Iain Duncan Smith is particularly obsessed with it over at welfare. One of the ways Lord Browne has done that is to include living cost loans in the price. That will now constitute a non-means-tested flat rate of £3,750. A grant system will offer families earning below £60,000 extra support in the form of grants up to £3,250.
Graduate tax
Mr Cable made a speech not so long ago promoting a graduate tax, which led many of us to conclude that would indeed be the conclusion of the Browne review. This weekend, he backed away from the idea. Ed Miliband, meanwhile, is a supporter. Why did Lord Browne back down from it?
He gave several reasons. A graduate tax is more complex, not least by requiring a tax for tuition and loan repayment for living costs. It’s also indefinite, whereas post-graduation tuition fees have firm end dates. A graduate tax requires payment after the graduate earns £6,475, whereas the review would see payments start at £21,000.
But in truth two factors played an overriding part in the decision. Firstly, and unsurprisingly: the deficit. A graduate tax would require an additional £3 billion a year until 2015-16 from government so it can fill the gap until students start paying.
Lord Browne comes close to admitting that this was the clincher in the report, something that’s not exactly hard to believe if you’ve been following political discourse over the last couple of years. “Given the pressure on public spending, we have taken a reduction in public investment in higher education as a binding constraint in producing a set of proposals that could reasonably be implemented in the near future,” he wrote.
Secondly, the reform would introduce a market in university courses. A graduate tax would charge regardless of course taken or student satisfaction. Lord Browne’s plan features no fixed-price for higher education. Different courses at the same institution would cost different amounts and different institutions would charge different fees too. By creating a market, Lord Browne believes university departments would have to raise their game if they wanted to charge high prices, not just coast by on the strength of the brand of the institution. This free market approach to the problem is hugely attractive ideologically to Tories and the ‘Orange Book’ Lib Dems in Cabinet.
As a side note, the reform doesn’t necessarily mean there will be no more government funding. Lord Browne holds open the door for government investment in departments which are essential to a healthy society, such as science and technology. Interestingly, he also raises the spectre of funding being taken from art and humanities departments to pay for it. It’s buried deep in the report, but he specifically alludes to such a scenario.
“There is a critical role for public investment even if students are investing more,” he wrote. “There are clinical and priority courses such as medicine, science and engineering that are important to the well being of our society and to our economy. The costs of these courses are high and, if students were asked to meet all of the costs, there is a risk that they would choose to study cheaper courses instead. In our proposals, there will be scope for government to withdraw public investment through HEFCE from many courses to contribute to wider reductions in public spending; there will remain a vital role for public investment to support priority courses and the wider benefits they create.”
Regulation
For students to be able to ascertain if a course is worth the money, Lord Browne envisages a tight regulatory framework delivering accurate information about courses.
The four current higher education regulation bodies will be replaced by the single Higher Education Council, charged with looking after students’ interests and the public investment in higher education. It will set and enforcing minimum quality levels across the sector, make sure the sector makes measurable progress on admitting qualified students from disadvantaged backgrounds, publish an annual survey of charges and act as adjudicator on disputes between students and their institutions.
With students from disadvantaged backgrounds costing more to get them through university, the council will target funding to ensure that institutions provide them with additional tuition and support to help them to complete their degrees.
Other plans
Lord Browne also suggested that there is a ten per cent expansion in places to satisfy increased demand.
Schools’ responsibilities would also be radically increased. Each school would be required to deliver its students individualised careers advice modelled on that offered by the private sector. It will be delivered by certified professionals who are continually trained.
A single online portal for applications for university entry and student finance would be created and run by UCAS. UCAS will be largely responsible for gathering information on university courses so it can be made available to applicants.
