Image: Foreign and Commonwealth Office [CC BY 2.0] via Flickr
Chris Parr speaks to the former universities and science minister about his new Hepi paper
It is now nine years since the maximum annual tuition fee level in England was tripled from £3,000 to £9,000 by the Conservative-Liberal Democrat coalition government. The architect of that system, David Willetts, has today waded into the heated debate about how the current government should reform higher education funding in a way that doesn’t destroy university—or government—finances.
Willetts, now a Conservative peer, was universities and science minister at the time of the fee rise, and his special adviser was Nick Hillman, now director of the Higher Education Policy Institute. It is Hepi that today published a 95-page treatise from Willetts entitled Boosting Higher Education while Cutting Public Spending.
“Ironically, despite Nick having been my special adviser, and being a friend, I’ve not previously done something for Hepi,” Willetts tells Research Professional news, “partly because the last thing Hepi needs to be is a vehicle for my thoughts. But I thought it would be good, finally, to do a proper piece of work for them.”
One of the central recommendations of Willetts’s paper is a reversal of former prime minister Theresa May’s decision to increase the earnings threshold at which graduates start repaying their student loans from £21,000 to £25,000—which has since risen to £27,295. He argues that the move “has brought no political benefit” and also comes at a fiscal cost because the interaction of the lower repayments with the high interest rate on outstanding debt means many graduates see their nominal debt increase each year.
“I think, oddly enough, the politics of lowering the threshold in particular may not be as bad as some people fear, because I think graduates want to see the day coming when that deduction on their earnings above the threshold goes away,” he tells us.
In his report, Willetts says that lowering the threshold to £21,000 would save £3 billion a year because of the impact it would have on the Resource Accounting and Budgeting charge. Forecast write-offs of student loans in England have risen from 28 per cent when the system was introduced to 53 per cent now.
Fee cuts ‘a disaster’
Elsewhere, Willetts suggests that there should be a review every five years of the levels of fees and loans so they can be recalibrated as the labour market and the economy change.
One thing Willetts most certainly does not recommend, however, is a reduction in fees. The UK government’s three-year Comprehensive Spending Review is due at the end of October, and will publish its long-awaited response to the recommendations of the Augar report—which called for fees to be slashed to £7,500—at the same time.
“Any fee reduction would be disastrous because that is cutting the resources for educating young people—that is what I am trying to head off with this pamphlet,” he tells us. “So you don’t cut the fees, and indeed if anything the resources available for teaching in universities are back down to the level of 2012. There are some people in the Treasury who think universities are awash with cash, but they aren’t.”
Because former prime minister May also implemented a freeze on tuition fee levels, preventing them from rising even with inflation, Willetts says the real resource in universities has been squeezed.
“You don’t lower the fees, but you do expect graduates to pay back and that was always my model, and when I was an MP I don’t think I’ve ever had a real graduate coming to me to complain about their repayments.”
Willetts no doubt has friends in influential places, and this report will be popular in policymaking circles. That said, it does come a little late in the day, released as it is on deadline day for submissions to the comprehensive spending review.
Unsurprisingly, his treatise is less popular with the University and College Union. “Lowering the repayment threshold to £21,000, which is well below the average wage, will be a millstone around the neck of young graduates and risks putting students off from getting the education they need,” said general secretary Jo Grady in response to today’s report.
“It also fails to address the systemic problems with the university funding model, which has led to rampant job insecurity and a precipitous decline in part-time and mature study.”
The two parties do find some common ground, however. Specifically, on Willetts’s assertion in his paper that it would be an error to stop funding Btecs and to force students onto T-levels.
“Willetts is right…to defend Btecs and the government needs to keep them and stop creating false divides between vocational and academic courses,” Grady said. “It is not about one or the other, but proper investment in both.”
Regrets, I’ve had a few
Willetts has long been honest about some of the unintended consequences of his 2012 reforms. Speaking at Research Professional Live in London last year, he said the decline in older and part-time learners, put off by the increase in cost, was one of his biggest regrets of his time in office—conceding that he “never thought that [increasing] fees and loans was going to hit mature students in the way it did”.
Speaking this week, Willetts tells us about other regrets.
“I do regret that we got rid of the remaining means-tested maintenance grants in 2016,” he says, “so I think it is a great pity that we now have a system where, in theory, a graduate from a low-income background will end up with slightly higher debt than a graduate from a more advantaged background. I think that is a very unwelcome feature of the system.”
If reforms to how loans are repaid—such as reducing the repayment threshold—did free up funding, it is in this area that Willetts says he would like to direct any surplus.
“I think the barrier to access to university is not the fees, because young people understand that they pay them upfront, they understand that this is a graduate repayment scheme,” he continues.
“But the pressure point is money to live on while you are at university. So, if there were resource available, I would put it into bringing back some kind of means-tested maintenance support—perhaps even for a wider range of recipients, like those in further education too.”
Willetts is not hopeful however, that there will be any significant re-investment of savings into the higher education funding system—at least not in the short term.
“I’m a realist, and I think at the moment the mood of the Comprehensive Spending Review is about where money can be saved. So I’m trying to steer the government towards saving the money via a measure that increases graduate repayments, not cutting the resource going into higher education,” he says.