John Denham is right about two things

John Denham is right about two things: we need more diverse higher education provision and we need to reassess the value for money of higher education.

Nick Hillman is director of the Higher Education Policy Institute

John Denham’s recent speech to the RSA is worth scrutiny because it offers the most interesting set of ideas on higher education from any Labour politician since the last election. It reflects the freedom enjoyed by ex-ministers not up for re-election.

The speech begins with a critique of the current system of undergraduate finance. It notes we “have the world’s most expensive public university system” but also that we “spend too little on higher education”.

These criticisms are the same as those made by the Thatcher government when introducing student loans. But Denham’s argument leads to the opposite conclusion: that loans have now gone too far.

He asks the fundamental question of what higher education is for. His answer is that it should be more about teaching and employability and less about discovering yourself during three years of study away from home.

He wants much of the money that is loaned to students for fees, as well as much of the maintenance budget, to be invested in a bigger teaching grant paid direct to institutions.

I quibble with his claim that “spending on teaching rises from £700m to £4800m – a seven-fold increase”. Shifting from tuition fee loans and the like towards more centralised grants does not in itself magic new money. But it would still have a big impact. One effect would be to bring English higher education closer to the European model of low fees and modest maintenance support.

Politically, there are three key points.

First, Denham’s views are very different to those of his colleagues. Ed Miliband has spoken warmly of a graduate tax. Denham, in contrast, wants to retain loans: “a sound, progressive, politically sustainable system would have loans sufficiently affordable that the great majority pay them in full” (he leaves room for a small graduate tax on top but it seems a sop to current party policy).

Secondly, Denham is lukewarm about maintenance support. As a minister, he made the maintenance grant regime much more generous. Now he wants to replace the non-repayable means-tested maintenance grants entirely with loans. Labour has been a fair-weather friend to maintenance grants: Blair abolished them for six years from 1998.

However, it is at least possible to argue that generous maintenance grants are too costly for the system as a whole. According to a recent leak, the coalition are contemplating replacing some maintenance grant expenditure with loans for that very reason. If they do, Liam Byrne’s response will tell us something important about his attitude towards Denham’s speech.

Thirdly, John Denham’s answer to high student living costs is more part-time provision, more employer-sponsored degrees and more students living at home. These are hardy perennials in the higher education debate. Denham also uses the 2013 Hepi / Which Student Academic Experience Survey to argue that some three-year degrees could be compressed into two years.

In contrast to his thoughts on funding, this would move us away from the European model of higher education, which tends to have longer degrees.

Denham says his speech is only a “thought experiment”, but there is one important contradiction and one omission.

The contradiction is that he complains of a “new social divide” between students who can afford to study away from home and those that can’t, but then assumes 60 per cent of students live at home under his model.

The omission is on EU students. It is difficult to ensure EU students – and Brits moving abroad – repay their student loans properly. But they are contractually obliged to do so. If tuition loans revert to teaching grants, and fees fall, the biggest beneficiaries will be EU students. They will come to the UK, enjoy lower fees and avoid paying anything like the true cost of their education.

Denham’s proposals shift expenditure from maintenance grants, which EU students don’t receive, to tuition grants, which they do.

As John Denham admits, no political party is going to regurgitate his plan unaltered in their manifesto. But every party should consider it carefully because he is right about two things: we need more diverse higher education provision; and we need constantly to reassess the value for money of higher education.

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