Clever accounting: our gift to the world

Willetts adviser says coalition approach to finance may shape global academy. John Morgan reports

May 16, 2013

An adviser to David Willetts has floated the idea that graduates could pay more towards their loans to fund extra places, while suggesting that the student movement may lack electoral impact because of “ugly protests”.

In an article in Contemporary British History, Nick Hillman, special adviser to the universities and science minister in the Department for Business, Innovation and Skills, also describes the off-balance-sheet nature of student loans - central to the government’s higher education policy - as “clever accounting”.

Mr Hillman positions the coalition’s reforms as successor to the income- contingent loans introduced under previous governments. He argues that the Browne review, which paved the way to scrapping teaching grant in most subjects, was “in tune with the general direction of policy over the preceding 25 years”.

Awareness of the costs of mass higher education had grown from the 1980s onwards, argues the paper, titled “From grants for all to loans for all: undergraduate finance from the implementation of the Anderson report (1962) to the implementation of the Browne report (2012)”.

In a section titled “the rationale for student loans”, Mr Hillman notes government scepticism in the 1980s about how spending on loans could save money. But he says that “clever accounting methods were devised to ensure that only the expected write-off costs of loans appeared as current public spending, rather than the full cash outlay.”

He adds that since 2010, the savings from expanding loans have helped to protect funding for schools, the NHS and pensioners’ benefits.

Mr Hillman argues that while student finance issues may affect elections in individual constituencies, their overall impact is easily exaggerated.

“Perhaps the student movement, which has proved susceptible to political activists prone to ugly protests, [seems] unworthy,” he suggests.

Looking at the challenges of widening access to higher education in financially constrained times, he writes: “One way to square this circle would be to reduce further the cost of each student for government - for example by securing higher loan repayment rates - and then recycling some or all of the savings within higher education.”

He notes that Browne “recommended 30,000 extra student places each year”. Mr Hillman concludes that internationally, “it is reasonable to foresee some harmonisation of student support systems along English lines”.

He adds that “the key question about the latest round of changes to undergraduate finance in England may not be whether the reforms survive but the extent to which other countries seek to emulate them”.

john.morgan@tsleducation.com

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