For the many, not the few

It is time to extend R.H. Tawney's 1922 vision of universal secondary education to universal access to tertiary study, argues Simon Szreter, and also to reject the coalition's fatally misguided economic policies

June 23, 2011

Almost 90 years ago, historian R.H. Tawney published a celebrated document arguing that the then-young Labour Party should adopt a policy of secondary education for all. At the time, it was considered to be of doubtful value by the great majority of conservative and business opinion in the UK. Surely it was the proposal of a utopian dreamer that all British citizens should have a right to free secondary education? What possible use could it be to most of them? It would only make them discontented with their lot working in factories. How could the nation possibly afford to educate all its boys and girls to secondary school standard?

To comprehend fully the ambitious nature of Tawney's proposal, it is necessary to realise just how tiny a fraction of the nation's youngsters were lucky enough to benefit from secondary schooling in the 1920s, when his essay appeared.

In 1921, only one in eleven (just over 9 per cent) of all those aged over 11 and under 15 attended secondary schools of any kind, including fee-paying. Yet within 22 years of Tawney's visionary proposal, the 1944 Butler Education Act would be passed by a Conservative grandee, mandating free secondary education for all from the ages of 11 until 15: precisely the socially just and economically correct policy that Tawney had argued for in 1922.

Despite a post-war austerity far harsher than the one we face today - and a level of national debt over twice as high - the nation found the resources to massively expand and publicly fund its secondary schools and their teaching staff.

Who today, looking back, could possibly say that Tawney, the visionary, was wrong? Who could say that the government in the late 1940s should not have maintained the levels of taxation needed to invest in a universal upgrading of its human capital? Thanks to this policy, an economy that had been flagging badly since the late 19th century was able to participate fully in the post-war economic golden age and enjoy the highest sustained rates of economic growth in its history, from 1951 to 1973, with its secondary-educated workforce.

But in the 1920s, mainstream and business opinion could see only the present costs, not the future benefits, of universal secondary education. Business people and financiers notoriously take a short-term perspective. They also have a reflex hostility to any policies that imply the need for higher taxation, convinced that this is a "wasteful" appropriation of the profits of private enterprise. By methodological design, conventional economics contains the same self-interested individualist perspective on the costs imposed by higher taxation, which insufficiently takes into account the long-term social and economic payoffs.

But Tawney was the leading social and economic historian of his generation, and history shows that the viewpoint of business people and financiers is not to be trusted as a reliable guide for long-range thinking about economic change and national economic strategy - especially in relation to crucial questions about investment in the nation's education system, its equitable design, and its potential economic virtues for the future.

If, as a poll for the Browne Review suggests, industry is convinced that there is a major skills gap in the economy, then the lessons of recent British history are that it should be campaigning to build on the previous government's extension of the age of participation in education or training programmes to age 17 and eventually to age 18. The private sector should also be supporting the immediate restitution of the Education Maintenance Allowance.

The Browne Review also concurred with the private sector that, relative to many Organisation for Economic Co-operation and Development competitors, especially Germany, technical and vocational training in the UK is poorly provided. By contrast, our higher education system is the envy of the world. Proportionate to population size, the UK has more top 50 (and top 200) universities and attracts more foreign students than anywhere else in the world. We never stop being told that we have a world-leading financial sector. But how often do the media laud our world-leading higher education sector?

It is a nonsense - and one that the rest of the world can scarcely comprehend - that to pay for the profligacy of the banks, the coalition government is now financially undermining this leading section of the nation's tertiary education system, radically withdrawing public funds from it. Meanwhile, it has no convincing plan to improve the "Cinderella service" of further and continuing technical and vocational education.

David Cameron and George Osborne have both talked about the importance of "rebalancing" the economy away from overdependence on the financial services sector of the economy by encouraging the development of the rest of the productive economy. But how is this to be achieved without a thoroughgoing upgrading of the human capital needed for the contemporary knowledge-based economy?

One of Osborne's principal policy contributions to rebalancing the productive economy has been to reduce the tax rate paid by companies to well below the 40 per cent income tax rate paid by the proprietors of many medium-sized and large businesses. Furthermore, he has offered companies a knock-down tax rate of 5.75 per cent in some circumstances if they use a tax haven subsidiary, instead of the 23 per cent they would otherwise pay from 2014. It is an odd way to "rebalance". The only thing that is certain about these measures is that they provide new work for the financial services sector in advising the corporates on their tax affairs, and they are good news for tax havens.

In truth, this is a fatally misguided set of policies. Corporate and personal tax-avoidance and evasion has increasingly starved the nation of revenue for its public services, such as further, technical and continuing education, over the past 30 years. It is a disgrace that companies should be encouraged by the Chancellor to avoid taxes, rather than be pursued by a vigorous HM Revenue & Customs when they fail to make the fair contribution they owe to the society and environment that provides them with the infrastructure and the human and social capital they need for commercial success.

Why are we getting more of these same failed policies - more tax avoidance, less public revenue - rather than investment in public services and human capital? Cameron and Osborne and their millionaire Cabinet are surrounded by hedge fund managers and bankers. Last year, 57 of them paid the £50,000 annual fee for entry to the Conservative Party's "Leader's Group" of donors, which affords them ready access to Cameron and Co.

To create the human and social capital for the rebalanced economy would require a truly ambitious and properly funded national plan for technical and vocational training in a revitalised further education sector. This would require bringing on board the unions and the employers so that the sector can thrive once again. The private sector would need to be persuaded of the wisdom of paying more tax for these purposes. However, the voice of offshore finance, represented by the insidious powers of the Corporation of London and the Leader's Group, drowns out any such voices of reason with its siren call to reduce all taxation to the minimum.

This means that such a plan can probably only be championed from the Opposition benches, as was Tawney's proposal in the 1920s. The Labour Party, after its prolonged, misguided and always doomed affair with high finance, once again is the natural constituency to support this. Just as Tawney argued that secondary education should be a democratic right for all citizens, so, with almost a further century of economic growth and development behind us and a full democracy from age 18 for both men and women, it is now the time to call for the right to three years of tertiary education for all.

It should no longer be the almost exclusive preserve of the children of the upper and middle classes, plus a token presence of working-class bursary holders, to benefit from the most substantial forms of post-secondary education and training. All citizens should be equally entitled to up to three years of tertiary education or training of their choice after secondary education - be it higher education, further education or vocational. It should be citizens' right to take up such education or training at any point in their lives that suits them, in units of study that suit them.

Education is a valuable, empowering and democratic resource of shared citizenship and of personal and vocational enhancement. This facility should be paid for universally out of general taxation, just as the expansion of secondary education was in its day. Our society is now collectively wealthier than at any time in its history; it needs only to access and distribute that wealth in a fair and democratic way to continue to experience broad-based and balanced economic growth, rather than the wildly unequal predation of casino capitalism that Osborne's measures seek to perpetuate.

In opposition, Labour has the opportunity to learn from, and draw a line under, its ill-fated embrace of the City. It can now set the terms of public political debate in a bold and clear way, by re-establishing the difference between Labour and its opponents, the parties who continue to kowtow to the financial elite and its failed and dangerous economic model for the world.

This is the Labour Party's opportunity to reposition itself as representing the great majority of the population. Despite the predictable efforts of the government and its friends in the popular press to distract with the right-wing staples of various forms of xenophobia, all citizens can now clearly see for themselves how the bankers and their never-ending bonuses provide an unedifying spectacle of sheer greed at the expense of us all - and with no productive contribution to show for it.

Contrary to the cosy myths about everybody benefiting from the City's "wealth creation", wealth has only ever trickled up, not down, and it has also gushed out, to private bank accounts in Switzerland and domiciles in Belize. Spectacular destruction of our living standards and public services has been the City's great legacy for the rest of us. The majority of votes would seem to be with those opposed to more of the same, if they can be mobilised.

As for the practical details of paying for tertiary education for all, and the rest of our public services, they are legion. The Institute for Fiscal Studies, the internationally respected, politically independent authority on public finance, has issued a full draft of its report on the findings of the Mirrlees Review, the most thorough examination of the tax system in a generation (the final version of the report will be published later this year).

This has demonstrated a number of ways in which the tax base can be increased without having the negative economic impact that right-wing ideologists always harp on about. One of the most powerful points is that there should be a land values and housing values tax, uncapped and proportionate to the current market value of these assets, which has the virtue that the wealthy can't hide these assets offshore.

A second, closely related policy favoured by the IFS is that tax rates on property income and capital gains should be increased to align them with income tax rates to remove the obvious, widely practised accounting ploy by employers of redefining income as capital in order to avoid tax.

Third, recipients of all substantial inter vivos gifts should be taxed on their value. Fourth, a tax akin to VAT on financial services is also advocated by the IFS.

Fifth, I believe that Labour should advocate adoption of the US practice that in a global economy, all passport holders who want the benefits of citizenship are taxed on their worldwide earnings. This means that nobody can avoid paying tax by working overseas or moving income offshore.

Sixth, and most importantly, the 25,000 UK tax inspectors who have been let go in recent years should be re-employed along with at least 25,000 more, if not 50,000. Their salaries are a superb public investment, as each one of them brings in an average of half a million pounds in illegally unpaid taxes every year. There is a stupendous amount of unpaid tax to be collected - amounting to scores of billions annually - according to both official Treasury and independent estimates. Finally, provided the mechanism of tax compliance is strengthened, a more progressive income tax schedule will provide substantial additional revenue, too.

These measures will pay for - and indeed expand - all the valuable public services that we need and benefit from. These are the services that the coalition is shredding while the bankers pay themselves their bonuses and pay the Tory Party Leader's Group subscriptions out of our tax bailout money.

Instead, we can spend it on the NHS, the Education Maintenance Allowance, SureStart, the Child Trust Fund, libraries, bus routes, support for the disabled...and tertiary education for all. Do voters want a democratic utopia or a Tory utopia for the greedy?

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