Can Labour deliver on fees?

The opposition must give universities guarantees about funding if it wants to gain support, argues Bill Rammell

August 7, 2014

60 per cent of parents question the value of going to university. Yet the vast majority still want their children to go

In recent years there has been much talk about “uncertainty” over university income. Yet, in reality, since the introduction of variable fees in 2005, the funding environment for higher education in England has had a stability that the university leaders of the 1990s would have given their right arms for.

The introduction of variable fees – which I presided over as minister of state for higher education – added in net terms to public funding, and preserved the unit of resource that had been so seriously eroded in the 1990s. Although the change was much criticised, it brought about genuine co-financing, was built on a progressive post-graduation repayment system, and heralded an expansion in access.

As substantial policy changes go, this can be championed as a real success story, and one of which the Labour Party should be proud.

The coalition’s changes in 2010 arguably deserve a harsher critique. The breaking of the Lib Dem pledge on tuition fees left a nasty taste in the mouth, and surely contributed to the continuing detachment from, and cynicism towards, politics among students. And whereas Labour’s reforms established co-financing, the coalition’s changes meant virtual privatisation of the funding source in England, albeit with backstop support from the state through the student loan book.

Within the context of austerity government, however, these changes stand out as a relative success story. No one can really deny that higher education has fared much better, financially, than the rest of the public sector. Local government leaders yearn for the funding “challenges” we face. And after a rocky first year, access has continued to expand. David Willetts, now from the backbenches, can be proud of presiding over what is arguably this government’s most successful policy change.

But real change and challenge is on the horizon after 2015.

The coalition’s fee changes carried with them a fundamental mistake compared with Labour’s reforms. There was no annual inflator to the student fee, meaning £9,000 is in real terms worth £8,000 by 2015, and £7,000 by 2020.

On top of this, Labour is now proposing to cut fees to £6,000 and, eventually, move to a graduate tax. I will always be a loyal member of the Labour Party but I’m sceptical about this policy shift.

In justifying it, Labour has highlighted survey data suggesting that 60 per cent of parents question the value of going to university. Yet the vast majority still want their children to go, and despite £9,000 fees, student enrolments have continued to rise.

I worry that cutting fees to universities will undermine Labour’s historic 2005 achievement in bringing funding stability and security to higher education.

Party leader Ed Miliband has said that Labour would maintain the unit of resource by making up the £3,000 fee reduction with Treasury cash. I welcome that commitment, but I’m worried about its durability. I’m not the only former minister who learned from experience to be wary of Treasury promises for particular spending priorities. Priorities change with time.

I’m a political realist, though. The cost of living crisis is a legitimate part of Labour’s critique of this government’s record. It is crucial to provide solutions to that, and the fee commitment is one such solution. And in what is likely to be the tightest and most unpredictable general election for 40 years, the student vote in marginal seats could be pivotal.

So how can Labour deliver its promise on fees and yet take universities with it? Along with the commitment, I think universities need three guarantees from Labour.

First, the unit of resource commitment needs to be for the whole Parliament.

Second, the delivery of this commitment should be explicitly reported on annually by the independent Office for Budget Responsibility.

Third, and critically, Labour should commit to legislate to uprate the £6,000 fee annually by inflation.

This triple lock would enhance Labour’s pro higher education position, and keep universities on side as part of a progressive coalition.

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