Blunkett's funding muddle

August 29, 1997

Should poorer students shoulder bigger debts, asks Ben Jackson.

As THIS YEAR's A-level results precipitate a frenzied scramble for university places before the introduction of tuition fees, it is clear that the Government's "new deal'' for universities is not as good as it first appeared. Despite the favourable press David Blunkett received for removing the middle-class subsidy of free higher education, the truth is that his proposals mean that the poorest students will shoulder the largest debts.

This is a unique achievement: the Government has proposed a package designed to get more students from poorer backgrounds into university. In practice, it will leave the poorest with the greatest debts because of the decision to abolish the maintenance grant - against the recommendations of the Dearing committee of inquiry into higher education.

The proposal to scrap grants, cheerfully accepted by both the Labour party and the National Union of Students, has largely avoided critical scrutiny, since it has been lost in the brouhaha about tuition fees. The absence of public debate has turned out to be politically convenient for everyone concerned except, that is, for students from poorer backgrounds, who will shortly be Pounds 10,000 in debt, nearly Pounds 3,000 more than those from middle and higher income groups, despite their much heralded exemption from fees.

The recommendations of the Dearing committee on funding were simpler. The committee suggested the retention of the means-tested maintenance grant, coupled with a flat Pounds 1,000 a year tuition fee for all students. This at least had the merit of ensuring that students from low-income groups would not graduate with larger debts than their better-off contemporaries.

In contrast, the Government's scheme will demand the tuition fee only from better-off students, but leave poorer students' maintenance support entirely in the hands of extended loan provision, while the better off are supported (as now) by a mixture of parental contribution and loans. The somewhat perverse outcome is that it will be those from disadvantaged backgrounds who will be making the largest personal contribution to the extra Pounds 2 billion that the Committee of Vice Chancellors and Principals estimates the sector requires over the next decade.

This is a point that was not lost on the Dearing committee, which justified the retention of a targeted grant on the basis that its removal would be regressive, removing subsidies from poorer students. The committee also suggested that it was easier to earmark funds for higher education from fees savings than grants. This reflects the widespread fear that the Government may simply absorb additional money raised from students into the general Treasury pot, rather than channelling it specifically into higher education.

Why did Blunkett reject Dearing's carefully argued model? One factor was almost certainly the position of the National Union of Students. The NUS, whose leadership is predominantly from the Labour Students' organisation, has accepted the principle of a student contribution to maintenance costs and advocates the wholesale replacement of the grant with extended loan provision. Since this is clearly a politically difficult step to take, the NUS remains committed to free tuition for all, rejecting tuition fees in any shape or form in a bid to placate its substantial free education lobby. It seems likely that Blunkett, by introducing means-testing for fees, was attempting to head off opposition from NUS. Yet NUS's solution has various problems.

A survey of funding options from the London Economics consultancy group (commissioned by Dearing and attached as an appendix to the main report) examines the NUS model and comes to some damning conclusions, which are depressing for those of us who sat through two NUS national conferences being lectured on the need to offer "realistic'' solutions to the funding crisis.

This "realistic'' model would, say London Economics, increase the PSBR in the short term and only release modest additional sums in the longer run, while doubling the average graduate's debt to income ratio and leaving 7 per cent of graduates with debt servicing payments of over 10 per cent of their annual income. The consultants conclude that withdrawing grants but preserving free tuition is "regressive in its effect and is likely to impede access to higher education''.

Unfortunately, however, it is this very policy that seems to have been influential on Blunkett. What is more likely to act as a disincentive to students from poorer backgrounds: a Pounds 3,000 debt incurred through tuition fees or a Pounds 10,000 debt built as a result of maintenance costs? If the Government is to means-test tuition fees, why does it not means-test the maintenance grant as well? This would remove the regressive implications of its policy.

Sadly, there is a simple reason why that compromise will be rejected: no major higher education stake-holder is arguing the case for grants. Student representatives, through NUS, are silent on the topic; the CVCP has long advocated universal payment for fees and maintenance and even the Dearing committee, whose report argued so forcefully for the retention of grants, seems willing to let its proposals drop for fear of losing the Government's goodwill.

So while Blunkett basks in adulatory media attention for at last forcing the middle classes to pay for their higher education, the reality is rather different. The removal of the maintenance grant is extremely regressive and would actually be more of a threat to widening participation in higher education than flat rate fees. It is about time that somebody, somewhere started saying so.

Sabbatical president of Cambridge University Student Union 1996/97.

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