Wednesday, October 13, 2010

Browne and out

So, it looks like tuition fees are heading up again.

This is a hot political potato, in much the same way the child benefit cut is proving - governments cut the wealthy's entitlements at their peril. The apparent proposal actually ticks many of the same boxes: it requires the upper income groups to contribute more, and is therefore bound to provoke deep opposition. In this regard it is interesting that a Conservative government should propose it, and even more interesting that the Lib Dems will have so much trouble over the issue, since they even opposed the introduction of much lower fees in the late 1990s.

Of course, this opposition, when made on principled grounds, is legitimate and probably right. Why should higher education be different from all other kinds of education, which are provided basically free at the point of delivery? It is true that the beneficiaries from higher education on the whole take most of the benefit for themselves, but surely this is true for lower levels of education too. Yes, the majority do not receive higher education, but these days around 40% do, so it can't really be argued that the majority end up subsidizing the minority. After all, the educated minority will end up paying multiples higher taxes over their careers than most of those that do not go to university, so in a sense they pay for it already. Why not completely socialize higher education? After all the externalities in terms of more productive workers and innovation through research accrue to society as a whole.

There is a very strong argument for a free market in tuition fees, with no up-front payment and subsidized and partly means-tested loans. This is basically what we have already, but with no real market, since the fees cap is set too low. This means that Oxford University charges the same as the University of Central England, which doesn't look like such a good deal for the student who takes on a loan of 10s of 1000s to go to UCE. With higher fees, Oxford graduates will have to pay back higher loans which will reflect in part the fact that they get a more valuable service.

The problem is political: New Labour never actually managed to convince people that fees and loans were ultimately in the interests of most graduates. Prospective students, and more importantly, their parents, do not equate a personalized debt (no matter how heavily subsidized) to an equivalently sized tax liability. This is important because a key part of the argument for loans was that graduates would still end up paying a large amount in extra taxes if the government had to pay for everything, and that universities would also be of lower quality because they would be starved of investment by short-sighted  politicians. But very few people actually look at it that way, and the argument has therefore been lost. '£90,000 to put two children through university' roar the headlines, as if graduates earning too much too much to claim child benefit for their kids were in any sense still their parents' responsibility.

So, this policy may well be right, or at least not much less wrong than the various policies that came before. But this doesn't matter, because the political argument is an impossible one to make, and will probably destroy the coalition.