Review of Higher Education & Student Finance in England
Half a century ago just 6% of young people went to university, paid for through general taxation. The other 94% subsidised those 6%, but that was OK because the people benefiting where almost universally well-off already.
Nowadays almost 50% of young people go to university, and it’s a scandal that they expect society as a whole to cover their costs. Because, it makes far less sense to fund education through general taxation now that it benefits far more of society than when it was reserved for a small elite.
Of course, those 6% weren’t really being subsidised, not most of them anyway, because they went on to earn higher wages and paid back the cost of their education through higher taxation. And since a well educated population is a benefit to society as a whole, because education is a public good, not just a private one, it’s right that those who have done well, even without going to university, pay back some of the costs through progressive taxation.
Lord Browne, who’s review was released today, however, disagrees.
He recommends that the costs of higher education be borne by students directly, with fees of up to £12,000. That would make our education the most expensive anywhere in the world. Even with the cap of around £3000 a year England already has some of the highest fees for public universities. Once we increase that we’ll overtake Norway (£3313/yr) the US (£3752/yr for public universities) and Iceland (£4072/yr). Only private US universities will cost more, and not much more at £13877/yr. The average across all sectors in the US is around £7000 and even private universities in Japan (£4379/yr) and South Korea (£5379/yr) will be cheaper than public universities here. Sweden, Finland, Denmark and others all still charge no fees at all and the OECD average is just £1427 per year.
Coupled with the government’s cuts to higher education funding it seems clear to me that we are heading a system of de-facto privatised institutions. Browne in fact recommends a more diverse system of higher education institutions. Cutting public funding just as fee increase are proposed seems designed to reduce opposition from those already in the sector, and it’s certainly tempting when faced with the prospect of huge cuts and job losses to not make too much fuss and take this extra source of funds. So it’s good to see UCU maintain their opposition to fee increases and propose other methods to fund education.
UCU’s preferred funding method would see fees scrapped and replaced with a Business Education Tax (BET), essentially an increase in corporation tax. Noting that combined local and national corporation tax rates in Japan are nearly 40% and 39% in the US, whilst the tax is actually being cut from it current level of 28% in the UK, there is clearly room to raise far more revenue than universities need from those businesses that benefit from well trained graduates.
Browne rejects a business tax on the grounds that businesses already pay for the benefit of highly skilled graduates “through higher wages”. If only we could use the same argument for the contribution from students.