Fabian fee plan aims to ‘make Corbynism practical’

Thinktank proposes to fund Corbyn goal of scrapping fees by National Insurance education accounts

July 21, 2016
Andrew Harrop

The Fabian Society has proposed a way for Jeremy Corbyn to fund his goal of scrapping tuition fees, via “National Insurance Education Accounts”.

Andrew Harrop, general secretary of the organisation, which bills itself as Britain’s oldest thinktank and as being at the forefront of developing ideas on the Left, writes in a paper published on 15 July that his proposal is “Corbynism made practical and affordable”.

During his successful campaign for the leadership of the Labour Party, Mr Corbyn outlined a goal to abolish tuition fees and reintroduce maintenance grants – which he said would cost £10 billion a year.

However, since his election, Mr Corbyn’s only public comment on fees has been in an interview with Times Higher Education. In that interview, he said that he hoped that abolishing fees would become Labour policy, while also recognising that it would take “serious debate within the party to achieve”.

“The English university finance system is a disaster,” writes Mr Harrop, referring to “typical debts” of £44,000 for graduates under the £9,000 fee system.

But he accuses Mr Corbyn and his front bench of being “almost silent on the question” since his election.

He continues: “The party thinks ending tuition fees would involve significant up-front costs…and dares not make a spending pledge without a way to pay for it.”

Mr Harrop proposes to fund higher education fee costs for individuals by “new personal education accounts”, which would be part of the National Insurance system.

“Today people in the UK earn a state pension by gradually building up a record of contribution over many years,” he writes.

“Under our scheme, people would ‘earn’ free university tuition in the same way, by having debt in their education account written off in exchange for their participation in the labour market and society.

“But the accounts would not just be for university. People could use them for training and further education too, which would implement another Corbyn pledge, the creation of a free entitlement to lifelong learning.”

Mr Harrop continues: “The accounts would work like state pensions in reverse. They would begin as a loan, but each year a slice of the debt would be written off, on the basis of the recipient’s NI contributions or credits. After (say) 30 years, all the debt would be written off (the longer the period, the lower the early costs). A graduate would not need to repay any of their tuition fees, as long as they spent most of their working life in the UK.”

And he says: “As with student loans today, the creation of each initial education account would add to the national debt but not to government spending. Extra public spending would only arise gradually, in annual slices of around £300 million, as the loans in the accounts were written off.”

Mr Harrop says that “future levels of tax would need to be higher to fund the existing volume of higher education funding” and that “some of the extra costs of the scheme could be funded by raising National Insurance contributions on high earnings – say from 2 pence to 4 pence in the pound – for people eligible for the accounts”.

He puts the cost of subsidising the education accounts, after 30 years, at £4 billion to £5 billion in 2016 prices.


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