The poor are better off with Labour than Tories, says IFS

June 27, 2003

Government plans to charge tuition fees of up to £3,000 a year are fairer to the poor than Conservative proposals to abolish fees altogether, the Institute for Fiscal Studies said this week.

The IFS report also indicates that Conservative plans would lead to a loss of 50,000 university places to cover a £350 million deficit over three years. It brands the Tory proposals "uniformly regressive".

The report acknowledges that students would be better off under the government's and the Conservatives' proposals than they are under the current system of upfront fees. But both proposals are insufficient to cover living costs as calculated by the National Union of Students.

But it says: "The Conservative proposals would benefit the richest households more than the government proposals, while the poorest households would be worse off."

It predicts that the absence of tuition fees in the Tory scheme would leave a £350 million gap compared with the Labour reforms. This implies a 50,000 decline in student numbers.

If higher education funding moved from the government's model, set out in the white paper, to the Conservative model, the poorest tenth of households would lose an average of 1.5 per cent of their income. Those in the top tenth would gain by about 0.4 per cent.

This is because Conservative proposals, which rule out contributions from students and graduates, would take more of the total costs of tuition from lower income taxpayers, who are less likely to be graduates, than under the white paper.

Greg Kaplan, research economist at the IFS, said: "The white-paper reforms would ask graduates to pay more of the costs of attending university and would extend the reach of the university system. This seems fairer and more efficient than asking taxpayers in general to pay more for each student, as the Conservatives propose."

The IFS says that under the white paper the government would contribute about 50 per cent of the cost of an average student's maintenance and tuition - and 69 per cent of the tuition alone. Under Conservative proposals, the proportions would be 70 per cent and 100 per cent, respectively.

But taxpayers will still have to foot the £1.8 billion-a-year cost of the white paper proposals, the IFS said.

Study Now, Pay Later or HE for Free is available from the IFS.

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