In 1997 the Government announced major changes to the structure of higher education funding, including the introduction of tuition fees and the abolition of the maintenance grant. It claimed that crises in the health and education services, and major pressure on public spending as a whole, left no option but to ask students to pay for their own education. We want to question whether this assumption was correct, and evaluate the strengths and weaknesses of the various alternatives.

The Dearing Commission, set up in 1996 after cash-starved universities threatened to impose an "admissions levy" of £300 on all new students, recommended the introduction of flat-rate tuition fee to cover 25% of course costs (roughly £1000 a year) and the retention of a fifty-fifty grant/loan split. On the very day the Dearing Report was published, and after numerous leaks, the Government announced its own proposals. These not only ignored Dearing's recommendation to keep the grant, but failed to commit the funds raised from fees to higher education, leaving the original problem of university funding unsolved. In other words, students were to be milked for all they were worth, without producing new money for a higher education system that badly needed it.

The NUS estimates that the average student will now leave university with a debt of £12,000. The abolition of the grant means that this burden will be very unevenly spread, with students from richer families finishing their courses virtually debt-free, while those from poor (or indeed ordinary) backgrounds face massive hardship. The threat of such hardship has had a severe affect on access, with an 11% drop in applications through UCAS this year. The fall in the number of mature students has been even larger. In practical terms, then, these changes make the original aim of the Dearing Commission - facilitating the expansion of higher education - virtually impossible.

Supporters of the Government's plans say that there are many more deserving claims on the public purse. New Solutions, Labour Students' forum for discussion of higher education funding, claimed that the £11 billion needed to return student support to 1979 levels could open 25 new primary schools every day, build 170 new hospitals a year, or construct 100,000 new council homes in order to house the homeless. The point is, however, that none of these things are being done. Under this Government, corporation tax has been cut by almost £4 billion, schools and hospitals are closing weekly and homelessness has increased. To say that students must pay for increased social spending in other areas seems strange when the stock market is soaring and taxation has been reduced to an all time low.

So what are the alternatives? Opponents of the government's plans have come up with a number of possible solutions. One of these is to restore the right of students to social security payments, including income support, housing benefit and, during the holidays, unemployment benefit. The NUS claims that this would cover the bulk of students' living costs, and that it would cost as little as £180 million. In reality, however, such payments would not amount to much more than the 1997/8 level grant of £1,500 - which proved in sufficient in preventing high levels of student debt. Besides, the social security system is designed for the unemployed and those on low wages. It seems illogical to make students - who though productive, are not wage earners - part of that system, and the administration costs could be substantial.

Others (including Balliol JCR, who produced a very interesting paper on the subject)1 have advocated the mechanism of graduate tax. This would still require students to pay for their own maintenance, but would be substantially fairer than the current system of loans, with all graduates earning above a certain threshold paying a set percentage of their income (perhaps 1.5% or 2%) for a set number of years (perhaps 15). The money raised could be used to fund tuition and maintenance costs, and higher education would continue to be free at the point of use. There are two potential problems, however. Critics say that taxing people purely because they wanted to go to university would be a major deterrent to "life-long learning", and may prevent students from entering important but poorly paid professions, many of them, such as nursing and teaching, in the public-sector. Pracical difficulties may also render a graduate tax proposal unworkable. Graduates are only one third of the population, and this, combined with the idea of a 15 year cut-off point, severely limits the amount of money such a tax would raise. 1.5% on the standard rate of income tax nets £3 billion; this tax would produce only a fraction of that, certainly not enough to abolish fees, restore the grant, and invest in higher education.

The Liberal Democrats and others have proposed "Individual Learning Accounts": higher education funds into which the learner, the Government and a business sponsor would each make a contribution. But this assumes that everyone who wants to study will be able to find a sponsor, and would limit subject choice by pushing students towards more vocational courses. Like the graduate tax, it would be a major disincentive to work in an impoverished public sector. There is also a dangerous potential for conflicts of interest. Putting the development of higher education into the hands of business would potentially create a more utilitarian and commercially oriented approach to learning, at odds with the concept of education as path to individual fulfilment.

There is of course another solution: to restore the principle of funding through general taxation. This does not necessarily imply increased taxation on average earners. The Government could reverse recent cuts in corporation tax: an increase of 5% would raise approximately £7 billion. Reducing defence spending to the European average, together with the phasing out of Britain's nuclear deterrent, would raise similarly large amounts, and state subsidies to declining industries such as arms production could be removed in order to unlock extra funds. Alternatively, the Government could increase the 40% top rate of income tax (a 50% rate for those earning over £150,000 would raise more than £1 billion per annum). We are often told that Britain is not rich enough to pay for free education. But over the last ten years, the wealthiest ten percent of society has increased its share of national income from 21% to 27%.

The money is there, but hard choices have to be made if we are to use it.

Higher education's value goes far beyond the contribution it makes to national prosperity through a more educated work force and stronger research capability. The advantage of collective funding is that it preserves not only the reality of access for all, but the idea of education as a social good, not a commodity that can be bought and sold.

We fear that the moves towards an individual-based system, and away from public funding of universities, could lead to the creation of a market place for higher education, with courses available only to the highest bidders. This would prevent higher education from fulfilling its most essential roles: "to strengthen democracy through the fostering of citizenship; inform public policy through research and teaching; strengthen local communities; and provide a cultural resource for the nation."2

 

1 "An Alternative Proposal for Funding Higher Education", Balliol College Junior Common Room (1997)

2 "Opportunity, Diversity, Partnership", NUS submission to the Dearing Commission (1996)