Another day, another sighting shot from the Coalition

Following in the tradition established by David Willetts (see earlier post), Vince Cable has delivered another speech on higher education that is more or less devoid of policy.

It raises issues that could just as well have been explored by the previous government. Indeed, some of them already were. It answers no questions. It sets no priorities. It floats some vague ideas.

Let’s look at one example. As an economist, Vince should be aware that the regressive character (aka favouring better-off graduates) of the current graduate contributions scheme cannot be fixed by replacing it with a ‘graduate tax’. A graduate tax, otherwise known as a loan you can never pay off, would be even more unfair, penalising poorer students who do well in their careers.

By contrast, the idea of a deferred loan scheme for tuition fees is completely sound. We have a faulty version of it at the moment. Let’s fix it up.

The current scheme’s problems are largely due to a failure to grasp the nettle of the egregious interest rate subsidy.

In the real world, if we borrow now and pay later, we pay a price for the  privilege – the interest on the loan. But the contributions scheme introduced in 2006 has a zero rate of real interest. Also, it applies only to full-time undergraduates. So it’s extremely expensive to the taxpayer, it gets in the way of access (no deferred loans are available for part-time and postgrad students), and it’s unfair to those graduates who don’t become successful professionals.

Read all about why, and how things might be changed, in Barr and Johnston’s excellent but rather technical paper here.

Vince Cable is right in saying that ‘we need to rethink the case for our universities from the beginning’.

Now we need some vision and inspiration – and some strong principles –  to help us get there.


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