Ryan Shorthouse

Theresa May’s tuition fee review is a grave political mistake

Theresa May's tuition fee review is a grave political mistake
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Reforms to the funding of higher education over the past decade, although not perfect, have been broadly successful. There’s now record levels of individuals and investment in English universities.

Theresa May, though, thought differently. Immediately after the last election, in response to a staggering number of young people turning their back on the Tories, she commissioned the Augar Review, promising major reforms to tuition fees. Much like the emergence of her flagship net migration target, the idea was actually first floated – unofficially – by her then First Secretary of State Damian Green.

The announcement was rooted in the erroneous belief that young people flocked to Jeremy Corbyn because of his promise to abolish tuition fees and student debt, deflecting from the Prime Minister's other policy and leadership failings. And the higher education sector, with astronomical vice-chancellor salaries and little variability in the fees charged, became another broken market that May and her coterie were determined to demonstrate they would fix.

Notwithstanding some sensible stuff in the Augar Review, the exercise has been yet another grave political misjudgment by the Prime Minister. She has raised expectations of major reforms to higher education financing, when none were needed, none could compete with the radicalism of Labour’s pledge, and now none will be forthcoming. Just like on immigration control, the Prime Minister has promised big and will deliver little. Indeed, she doesn’t have the time or numbers in parliament to even implement its recommendations.

There are problems not just with the politics of the Augar review, but the policies too. Reducing the tuition fee cap and the interest rate on student loans sounds good, but both do absolutely nothing for the students and graduates who could do with more money in their pockets. The only beneficiaries would be older, wealthier graduates, who would pay less at the end of the loan repayment period. Nearly everyone else has their loan written off, so the amount they pay each month or overall will not change.

The Augar Review’s headline recommendations are basically a tax cut for the wealthy, running counter to the whole purpose of the review, which was to do more for those who don't do well out of university, or indeed don't go at all.

Worse, it proposes extending the repayment period from 30 to 40 years, thereby making low and middle-income graduates who have their loans written off pay more overall. Even on a monthly basis, the Augar Review is asking those on modest incomes to contribute more, with its proposal to lower the salary threshold for student loan repayments. And, to compensate universities for the loss of income from the tuition fee cut, it proposes increasing direct state funding for those offering high-cost, high-value subjects. Put another way, all these changes would mean the most successful graduates paying less for higher education and everyone else – including non-graduate taxpayers – paying more for it. This is absurd.

Restoring maintenance grants for students from low-income backgrounds to replace part of the maintenance loan they current receive is a well-intentioned but ill-judged policy: the only financial beneficiaries would, again, be older, affluent graduates, albeit originally from low-income backgrounds. Since the maintenance loan is junior to the tuition fee loan, most low and middle-income graduates presently will not even get around to paying it. The government should instead focus on extending the amount of maintenance loans available to students, including enabling apprentices to access them.

Encouragingly, the Augar Review does seek to increase funding and widen access to the student finance system for those enrolling in further education. It suggests that both further and higher education students access tuition fee loans for any course they wish to take throughout their lives, including dropping the restrictions on eligibility for those taking equivalent or lower qualifications. But the size of loan available needs to be much higher than the maximum cost of a four-year undergraduate degree. A more generous lifetime loan account should be offered to all adults.

We should not be restricting access or deterring anyone from attending university. The benefits, both financial and non-financial, of participation are considerable and well-evidenced. If graduates earn low salaries after, this does not indicate that it was all just a waste of money. Graduates, after all, don’t pay anything for their higher education if they earn less than the relatively high repayment salary threshold.

The current PM has spent too much time quibbling about today’s student finance system. The next one should focus on increasing the amount available through it and eligibility for it.

Ryan Shorthouse is the Founder and Director of Bright Blue, an independent think tank for liberal conservatism.