NUS funding model offers serious lifeline to the Lib Dems to think again

The Liberal Democrats have got themselves in quite a mess on higher education funding. Today, we have the bizarre spectacle of the Vince Cable pulling out (on “police advice”) of a planned speech at Oxford University because students planned to protest his Government's plans to at least double tuition fees.

Our guest writer is Wes Streeting, former president of the National Union of Students (2008-10) and currently chief executive of the Helena Kennedy Foundation, an educational charity that promotes widening participation and social mobility; Wes is writing in a personal capacity

The Liberal Democrats have got themselves in quite a mess on higher education funding. Today, we have the bizarre spectacle of the Vince Cable pulling out (on “police advice”) of a planned speech at Oxford University because students planned to protest his Government’s plans to at least double tuition fees. Where the Liberal Democrats would have once organised such protests, now they run and hide from them.

Yesterday in the House of Lords debate on the Browne Review, Baroness Kennedy said:

“I am concerned that we will see the arrival of Tina. Noble Lords may wonder who she is. Tina is the mantra that we hear too often nowadays: there is no alternative.”

Tina has arrived. At Deputy Prime Minister’s Questions this week, Nick Clegg claimed that the Government has looked “very carefully” at the case for a graduate tax, saying:

“…it has also been proposed by the National Union of Students – but it is not workable and it is not fair.”

Clegg, and his Liberal Democrat colleagues, ought to look a bit closer at this issue. Since the publication of the Browne Review the political debate has been allowed to polarise between proposals of the Browne Committee and a pure graduate tax. This has not occurred by chance; it was the only alternative considered and addressed by the Browne Review.

The ‘pure graduate tax’ option is also a complete straw man. I have yet to hear a single commentator or stakeholder recommend a pure graduate tax. It has certainly never been proposed by NUS. There is no evidence that the Browne Review, or the Government, has given the full range of alternatives due consideration.

The NUS model, or some variant on it, could be a serious lifeline for the Liberal Democrats. It differs from the pure graduate tax in a number of important ways. For example, it is time limited for 15 years, the revenues would be held in an independent trust to ensure the revenue reaches universities and don’t end up being diverted by the Treasury. Unlike the Browne proposals, it would eliminate the concept of tuition fees, debt linked to fees and would generate savings for the Treasury in the longer term.

Some Responsibility for this one-sided debate should rest with the Labour opposition. Labour’s message has been muddied by dissent within the Shadow Cabinet from those who were previously only too happy to accept fuhrerprizip on higher education funding. Ed Miliband’s platform was in support of the graduate tax principle and he should continue this break from the past.

There are two real alternatives available to the Liberal Democrats; they can demonstrate the value of their presence in the coalition by changing the direction of current policy, or their ministers can abstain while backbenchers vote against. There is nothing in the coalition agreement that binds the Lib Dems to supporting higher fees. If they do it will be by choice and will be the ultimate betrayal of students and their own values.

23 Responses to “NUS funding model offers serious lifeline to the Lib Dems to think again”

  1. Wes Streeting

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  2. Joe Anderson

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  3. Laurence Turner

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  4. Ma

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  5. HKF

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  6. Shamik Das

    NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting on @leftfootfwd

  7. NUS Student Media

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  8. Lauren Crowley

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again http://bit.ly/aZ4I3N #fb

  9. James Lee Pickin

    RT @Lauren_Crowley: RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again http://bit.ly/aZ4I3N #fb

  10. Gus Baker

    Good blog by @wesstreeting on grad tax and Lib Dems. http://bit.ly/aZ4I3N.

  11. cim

    The debate between “Browne” or “graduate tax” is a little strange, since Browne effectively is a graduate tax, and not massively dissimilar in payments to the NUS model (the NUS model is marginally more generous to mid-earnings graduates and much more generous to high-earnings graduates, and marginally less generous to low-earnings and part-time graduates)

    The fees proposed under Browne would leave the vast majority of graduates with a debt that they can’t completely repay before the 30-year writeoff, even with the low-end £7k fees. (For £7k fees, full maintenance loan, and a 3-year course, then a graduate would need their real-terms salary to average £37.5k over the first 30 years). Because of the mostly inevitable write-off, Browne is essentially a 9% graduate tax on earnings over £21k for 30 years.

    As I’ve said before, the interesting consequence of this is that for the vast majority of students, there’s no financial consequence to them of paying £12k fees rather than £7k fees (their repayments are identical), but the £12k fees benefit the university more. The only graduates to which there’s an actual difference between £7k and £12k fees are those who end up rich after all and so pay more back under £12k fees rather than £7k fees. But they’re rich, so I’m not really concerned about a little extra taxation for them, since they can afford it. (Which of course means that “Browne but with a £7k fee cap” is generally worse than either “Browne” or “status quo”)

  12. David Levene

    “their ministers can abstain while backbenchers vote against”

    Which would still see the Browne Review passed

    @ cim

    The key difference is that under Browne students leave with debt, and with a grad tax they don’t. Young people from more marginalised backgrounds are more debt averse, so higher fees will disproportionately affect them. Bursaries or the prospect of a write-off when you’re 50 won’t change that. How many students look into the bursaries available, or calculate repayment rates against hypothetical earnings, before applying, especially if they’re from poorer schools where careers advice is less good (for example)? There’ll always be a big information gap on that kind of thing, and it’ll be even bigger for those from marginalised backgrounds. The Sutton Trust did some research on this. The headline number will always be the fees charged – there’s no real way to offset that deterrent.

    Also I believe there’s a difference in terms of interest rates.

  13. Susan Nash

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  14. Laura Purll

    RT @leftfootfwd: NUS funding model offers serious lifeline to the Lib Dems to think again: http://bit.ly/aZf9RR writes @wesstreeting

  15. Hot On Startups

    NUS funding model offers serious lifeline to the Lib Dems to think again | Left Foot Forward
    http://safe.mn/1gEq

  16. Miram Show

    NUS funding model offers serious lifeline to the Lib Dems to think …: The Liberal Democrats have got themselves … http://bit.ly/dCGymP

  17. Jason Keen

    Another shout out to #OxProtest in a very good article by @wesstreeting about the possibilities for a #gradtax: http://bit.ly/cbomDQ

  18. shawna walker

    NUS funding model offers serious lifeline to the Lib Dems to think …: The Liberal Democrats have got themselves … http://bit.ly/bTYitY

  19. cim

    David Levene: Certainly I agree that the information gap – and even the name of things (it’s called “student debt” but it doesn’t really act like any other form of debt in existence) will put some people off university. But… let me rebrand but not actually change the substance of Browne:

    – your education will be free when you get it, and you’ll get between £3750 and £7000 a year support towards living costs, depending on your financial situation. Part-time students will also get this support.
    – your university will tell the government approximately how much your tuition will cost, to receive an appropriate level of funding to pay your lecturers, buy library books, and so on. You can find out how much they ask for, if you’re curious. [1]
    – after you graduate, you will pay for thirty years an additional income tax of 9% on any annual income over £21,000, to help repay the government for the costs of your support and tuition, and so allow it to fund future students.
    – You’re not generally expected to repay the government anywhere near the full costs of your education, but in the event that after graduation you become very rich, your extra tax payments will be limited so that you don’t have to pay through this tax more than the government had to borrow to fund your education.

    Sounds pretty good now?

  20. cim

    Oops. Dangling footnote there. It was supposed to read

    [1] The trust Browne places in universities to tell the government how much money they want for each student is amazingly high. The taper looks like it helps regulate this, but actually doesn’t, since with uncapped “fees” (as proposed by Browne) you just ask for more money until the post-taper funding is the size you want, and with capped “fees” you just ask for whatever the cap is.

  21. Mr. Sensible

    The Lib Dems need to go back to the drawing board with this and start again.

  22. The right protest for the wrong reasons | The Sociological Imagination

    […] declining participation (although I’m interested if anyone has other analyses on this).  And the NUS plan for the graduate tax looks pretty similar to the latest versions of the raised fees.   Whatever […]

  23. The right protest for the wrong reasons? | Campaign for the Public University

    […] declining participation (although I’m interested if anyone has other analyses on this).  And the NUS plan for the graduate tax looks pretty similar to the latest versions of the raised fees.   Whatever […]

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