Ed Miliband says a future Labour government would cap tuition fees at £6,000 a year — £3,000 less than the present cap. On the face of it the policy ought to be a vote winner. In practice it’s not as simple as that.
Economists have pointed out that most students would continue to make tuition loan repayments for most of their working lives: any debt still outstanding after 30 years would be written off by the government. The main beneficiaries of Labour’s plan are people who can pay off their loans in less than 30 years — and that will only be possible if they earn large salaries or inherit wealth.
It is very odd for Miliband, of all people, to propose a policy which chiefly benefits the wealthy. If the Labour party believes money can be raised by cutting tax breaks on pensions, it would be better spent on what Labour insists on calling “the forgotten 50 per cent”.
Expanding technical education would benefit many young people, including some who currently go to university in the false belief that it is the only path to success. Indeed, today there is a growing amount of graduate unemployment.
In reality employers are crying out for people with technical skills, qualifications and real-world experience, a blend best achieved by combining work and study — learning and earning. Young people deserve clear, well-supported paths that will take them all the way from school to highly-skilled, highly-technical careers.
That’s what we set out to deliver in University Technical Colleges. From ages 14 to 18, students combine core subjects such as English, maths and science with demanding technical subjects such as engineering. We’re doing the same in Career Colleges, where the specialisms include hospitality, catering and digital technology.
At 18 most UTC students already have Level 3 qualifications, meaning they are ready and able to go straight on to Higher Apprenticeships with companies like Rolls-Royce, Network Rail, JCB and the National Grid, where they will have a salary of £15,000 and study for a foundation degree at the company’s cost. The students could go on to a full honours degree, but not for a full three-year term as they will want a course of two years, studying one or two days a week. Very few universities offer that sort of course. These students would get a full degree and have no debt.
I am convinced many more young people would take this path if they could. However, figures from the Higher Education Statistics Agency reveal an alarming fall in part-time higher education in the last four years. Looking purely at UK residents attending English higher education institutions (HEIs), part-time enrolments fell from 667,000 in 2009/10 to 490,000 in 2013/14.
Not surprisingly, there has been a parallel fall in qualifications awarded by HEIs. In 2009/10 they awarded 140,000 foundation degrees and undergraduate qualifications other than degrees. Four years later it was 98,000: a fall of 30 per cent. This decline is due in part to part-time students not qualifying for maintenance loans, and there are hardly any scholarships for part-timers.Meanwhile, the number of full bachelor degrees awarded — three-year, full-time courses — rose from 351,000 to 383,000.
Fees of £9,000 a year guaranteed for three full years have allowed universities to maximise their income. It has been a golden period for them, and over the last four years most English universities have seen their balance sheets grow by frankly astonishing amounts. In effect, universities have been ring-fenced while further education has been cut. Take Leicester University, for example: in 2009/10 fixed assets were valued at £174 million. Four years later: £259 million (an increase of 49 per cent). Over the same period the general reserve went up from £58 million to £82 million (an increase of 41 per cent).
I looked at the accounts of 20 universities ranging from Anglia Ruskin to York. All of them saw their tangible assets increase in value between 2009/10 and 2013/14. The smallest percentage increase I found was at Birmingham University — 7.9 per cent. At the other end of the spectrum, De Montfort University in Leicester increased its tangible assets by 78.4 per cent. Across 20 universities the average increase was 30.2 per cent. Perhaps that explains why every university I visit seems to be in the middle of a major construction project. If they pour money into buildings it’s theirs forever.
A lot of this is being funded from tuition fees. However, we know many students will never repay their loans in full and that the taxpayer will have to write off billions of pounds. The journalist and HE expert Andrew McGettigan estimates that over the last four years the Department for Business, Innovation and Skills has used £10 billion of extra reserves to cover falls in the recoverable value of existing student loans. Billions more will be written off in the decades to come. By moving the cost of universities to students’ fees, higher education has been moved off the Government’s balance sheet and it will only come on again when a large number of loans are written off. When companies resort to off-balance sheet financing it is usually a prelude to their collapse.
In short, Labour has set its sights on the wrong target. The questions we really need to ask are the following: Are we paying universities too much? And should we invest more in technical and part-time courses and less in full-time first degrees?
If it is a choice between the two, I would say “yes” to the second question. My manifesto commitment would be this: in order to increase opportunities for all 14-year-olds, we will launch a ten-year programme to enhance the status of technical and vocational education, and spread it across the country by creating specialist colleges ranging from engineering and computing to catering and hospitality, digital technology, creative and performing arts, business studies, professional and caring services, and sports science.