There is a definite pre-crisis flavour to British politics at the minute. Whilst Rishi Sunak might be spotting “green shoots”, a short-term improvement in economic performance must be outweighed by the smoke and sirens coming out of various parts of the system.
Social care is one. To date, politicians have kept it off Westminster’s books by making it a statutory responsibility of local authorities (and turning Council Tax into a de facto Social Care Levy in the process). But a growing number of councils are now spiralling towards bankruptcy; letting them sell assets to cover costs is only postponing the inevitable.
Another creaking sector is universities. A recent fall in the number of international students has laid bare just how dependent on immigration the sector has become, as the Times reports this morning. With revenues squeezed, universities are cutting courses, impacting domestic students.
We have looked at why this is in a previous piece:
“Universities make a loss on home students. The Russell Group puts the figure at £2,500 per student per year, and “conservatively project” that this will rise to £5,000 per student per year under current conditions. This obviously creates perverse incentives. One is that it seems to militate strongly in favour of universities prioritising “classroom-based subjects” (average annual cost per student: £10,500) over STEM (£14,000) or medicine (£23,500).”
At root, it’s a very familiar story of British politicians wanting something without wanting, or without the British public being willing, to pay for it. Another perverse incentive of capping home fees below the break-even point is that universities have been induced to woo foreign applicants via dubious means, including a growing number who never actually graduate (what Neil O’Brien dubs the Deliveroo Visa Scandal).
Ministers are in an invidious position. Allowing the sector to import ever-higher numbers of foreign students (real or otherwise) is politically easiest, in the short term.
But even notwithstanding the broader problems with our current dependence on mass immigration, it might not even be sustainable. Students can be housed very efficiently, four or more to a house, but they still need homes and we aren’t building any. In places such as York, where plans to increase student numbers vastly outstrip plans to increase housing supply, there are already signs that the housing crisis might choke the sector’s expansionary ambitions.
Yet there is no public appetite for increasing domestic fees either, let alone in such a manner (i.e. removing the cap) that would allow genuine price differentiation between different institutions and courses. Merely raising the cap would just mean every university charging the new amount, giving school-leavers the same dearth of information about the actual value of different degrees.
It would also heap even more financial burdens on young workers, who thanks to loan repayments already face usurious marginal tax rates (on top of record housing costs and more than a decade of flat real wage growth). Higher fees would also further corrode the (already extremely patchy) graduate premium.
At this point, parts of the sector will normally pipe up with an apparently obvious solution: why don’t we simply pay for universities out of general taxation? University used to be free, after all. Let it be so again! Government can pick up the tab, there will be an unlimited supply of prospective students, and mana for all.
Like breezy talk about a National Care Service, this proposal is nuts, seemingly rooted in a childish belief that central government is an inexhaustible source of revenue which can be tapped to avoid difficult questions.
The reason Jeremy Hunt and Rachel Reeves are fighting over a tiny sliver of economic territory is that both grasp the precarity of the public finances: budgets are increasingly stretched even with taxes at historic highs. There is no room for bringing huge new spending commitments onto the state’s books, especially in order to avoid a difficult conversation about which degrees actually generate a real return.
On paper, the sensible starting point for reforming the sector would be for ministers to commission in-depth research on that very question: which degrees generate a real graduate premium, be that for the student or the nation? (At minimum, this would mean coming up with a definition which actually controlled for other variables, rather than the current method of simply comparing graduate and non-graduate outcomes and ascribing the whole difference to the degree.)
They could also consider shifting towards new ways of funding higher education that placed the burden on those who are actually in a position to make an informed decision about the value of the degree, such as my mooted graduate tax for employers, or shifting from universal loans towards a system of targeted grants.
But there is scarcely more appetite for that than for raising fees. Taking action against low-value courses (and indeed institutions) means admitting that some (likely an increasing proportion) of existing graduates, paying through the nose for having been to university, were mis-sold an aspirational illusion, and would almost certainly mean fewer people going.
That would reduce university’s domestic losses, and thus their dependence on overseas students. But would strike at the very heart of one of the sector’s principal functions, which is laundering regional subsidies.
Just as with social care, there is no easy way out. Neither indefinite expansion of the sector, with ever-more foreign students and ever-sketchier marginal returns on investment, nor a painful confrontation with the reality of checking that expansion, appeal to politicians or the public. Thus, just as with social care, all Labour and the Conservatives are likely to do is hope the other lot are in office when the music stops.
The post Politicians have to stop ducking the hard question of how many degrees are worth paying for. But they won’t. appeared first on Conservative Home.
Click this link for the original source of this article.
Author: Henry Hill
This content is courtesy of, and owned and copyrighted by, http://www.conservativehome.com and its author. This content is made available by use of the public RSS feed offered by the host site and is used for educational purposes only. If you are the author or represent the host site and would like this content removed now and in the future, please contact USSANews.com using the email address in the Contact page found in the website menu.