Tuition fees

Following a report by the Institute for Fiscal Studies that looked into tuition fees, Jo Johnson, Minister for Universities, has outlined the government’s stance on the higher education system in England.

Jo Johnson, Minister for Universities, said:

Last weekend my colleague Damian Green gave a characteristically thought-provoking speech about how the government should address the needs of younger voters. In answer to a question about tuition fees, he suggested a national debate, in which we could calmly examine the arguments of abolitionists. This has led to some misguided speculation that the government was planning to abandon our successful higher education funding framework. It is not.

The government has three crucial policy objectives for undergraduate higher education: first, to reduce inequality, so that a university education is equally accessible to people from disadvantaged backgrounds, not just a moneyed elite; second, to fund our institutions at a level that enables them to provide world-class teaching and research; and third, to share the cost of doing so fairly between the individual student benefiting from a graduate earnings premium and taxpayers in general, most of whom will not have attended university.

Our current system of tuition fees, financed by loans repayable only by graduates earning above a certain level of income, is the only one that can reconcile all three. It is fair, and has won the praise of experts around the world, with the Organisation for Economic Co-operation and Development noting that the UK is “one of the very few countries that has figured out a sustainable approach to higher education financing”. The major reforms to English higher education in 2012 significantly increased average per-student funding. Graduates don’t start repaying loans until their annual incomes hit £21,000, and loans are written off after 30 years. The fact that some loans never get fully repaid is a deliberate subsidy for the lowest-earning graduates, not a symptom of a broken student finance system.

It is a little understood paradox that fees actually improve access to higher education. What stops poorer students going to university is not fees, but the cap on student numbers necessary when universities are directly funded through general taxation. By enabling English universities to charge current tuition fees, the government no longer has to ration access to higher education via a cap on student numbers. This enables it to offer more places, including to young people from disadvantaged backgrounds. The result is, they are now going to university at a record rate – they are 43% more likely to go to university than they were in 2009. By contrast, in Scotland, where fees were abolished in 2007, student numbers have been limited, and the poorest have suffered. This matters for young people: university degrees continue to be one of the most reliable pathways to better jobs and higher pay. Graduates earn, on average, substantially more than people with A-levels who did not go to university: a degree is worth on average £250,000 in higher lifetime earnings for a woman.

Abolishing fees would be mind-bogglingly expensive, requiring over £100bn of additional spending between now and 2025. This would need to come either from cuts to other public services, from increasing taxes on working people, or from increased borrowing – which would add to the burden for the next generation. As the IFS has observed, abolishing tuition fees would also be socially regressive: as well as unfairly burdening the general taxpayer, it would benefit mainly those students going on to well-paid jobs, who repay their loans in full. Jeremy Corbyn has evidently decided that he does not care for this inconvenient truth: the populist appeal of abolishing fees counts for more than reducing inequality.

It is right that we have a national debate about opportunities for young people. And Green was correct to argue that we need to think hard about issues such as housing, devolution and technological change. We will continue to look at the details of the student finance regime to ensure it remains fair and effective. But getting rid of fees does little to help young people: indeed, by reducing access to education, by damaging the viability of our universities, and by piling tens of billions on to the national debt, it does precisely the opposite.