University Tuition Fees

Alex Sobel Excerpts

Monday 27th November 2017 Westminster Hall

[Alex Sobel (Leeds North West) (Lab/Co-op)]

It is a pleasure to serve under your chairship, Sir David. I thank my hon. Friend the Member for Hartlepool (Mike Hill) and the Petitions Committee for bringing this debate, after the online petition was signed by 160,000 people, so that we can discuss the subject.

This is the issue that first drew me into elected politics as a student at the University of Leeds. I was concerned that the Dearing review would bring forward fees, ending the free education that I enjoyed along with many other Members of this House, and it led me to seek election to the student union executive at Leeds University. I spent that year and every year since then campaigning against tuition fees and for a return to free higher education. This debate is close to my heart. I hope that the Government will take heed and reflect on the damaged caused by increased fees.

This Government and the coalition that preceded them, who introduced £9,000 fees, view higher education as nothing more than a pre-work training course and a source of personal economic mobility. That marketised view of education does nothing to differentiate educational institutions from private profit-making entities and markets such as retail. To a free market ideologue, the system created by the Conservative and Liberal Democrat coalition is entirely logical; for the rest of us, however, it is deeply flawed. My view, and that of the thousands of people who signed the petition, is that tuition fees are not sustainable. I am sure that my hon. Friends will agree that education is not a business but contributes to the common good of the nation—what we used to call the common weal.

To look overseas, Chile under Pinochet reduced and then stopped providing direct grants to universities. Bahram Bekhradnia of the World Bank team that went to Chile to help to reform the system said:

“Universities were funded for teaching only via the tuition fees that students henceforth paid. And students received loans from the government to enable them to pay their fees. Sound familiar?”

This Government’s system is straight out of the Pinochet free market playbook, one widely recognised to have failed. Those are not my words but those of somebody from the World Bank. He continues:

“Well, after three decades, the Chilean government has now concluded that this is an unsatisfactory way to fund higher education…Chileans are looking for a new system under which the government will provide grants to universities funded from general taxation.”

They have started down that path and away from a fees-based system.

Looking at a country that undertook the free market experiment in higher education over 30 years ago, and which we are still in the early stages of, is instructive about what will happen here in future. First, in Chile, the debt of former students is colossal in relation to their earnings—by far the highest in the world. England has started to catch up: graduate debt is exploding as cohorts of students from the new funding regime complete their degrees. Secondly, just as in primary and secondary education in this country, previous Chilean Governments encouraged private institutions of variable quality in tertiary education, which now educate 80% of people. As a result, there are serious concerns about some private institutions creaming off taxpayer-funded loans for students and making unsatisfactory provision in return. Thirdly, the funding arrangements make it difficult, if not impossible, for the Government to steer the higher education system in a way that is possible with direct grant funding. That matters when higher education is a vital element of a country’s economic and social development, as Governments around the world, including the UK Government, increasingly believe.

That is a vision of our future unless we change the system. The Chilean Government under Michelle Bachelet have started to reform the system: 80,000 university students received free education last year and the majority of students had a cost reduction. It took Chile 30 years to reverse the mistakes of a free market in higher education. Let us not repeat the same mistakes here.

It is shameful, given that the contribution of the public purse to universities is one of the lowest in the OECD, that we are not seeing greater levels of state funding for something that contributes so much to our nation’s welfare. The Government contribute no more now with £9,250 fees than when £3,000 fees were introduced. In fact, with the proposed freeze at £9,250 this year and next year, universities are seeing a real-terms funding cut. Students are paying for the majority of the system but seeing cuts to university funding from central Government. Students and universities are victims of the Government’s chaotic policy. Free market ideology means the Government take no responsibility for the destruction and dismantling of our once renowned centres of education but degrade our institutions by starving them of state funding. It is time to call a halt to the coalition Government’s free market experiment and this Government’s continuation of it, and to implement a system that encourages readily available higher education for anyone with a will and a desire to learn.

--- Later in debate ---

[Joseph Johnson]

My hon. Friend is right: putting the funding of nursing places on to the sustainable basis that other students are on will enable far greater participation, and result in an uplift in the numbers of nursing students in this country.

Taxpayers already contribute around half of the costs of the higher education system. We believe that it is right that graduates should also contribute, and that that contribution should be linked to their income. As I have said, that means that those who have benefited the most from their education repay their fair share. The hon. Member for Leeds North West (Alex Sobel) gave us interesting insights from Latin America, which I know is a source of great inspiration for those in the Labour party at present. We look with interest to see what other lessons he draws from Venezuela and countries from that part of the world, as Labour develops its ever-shifting policy on higher education.

Every year, the Government consider the appropriate maximum level of tuition fees, and sets a cap. The Government consider whether the maximum tuition fee amounts should be uprated in line with inflation, to support continued investment in course delivery. We are committed to ensuring the ongoing sustainability of our world-class higher education sector. The student finance system ensures that teaching in our universities is well funded, but that individuals do not pay until they are seeing a good return on their investment. As I said, continued investment in the higher education sector has seen funding per student per degree increase by 25% since the 2012 reforms.

What is more, funding per student is today at the highest level it has been in almost 30 years. The recent decision to freeze the maximum level of tuition fees in the 2018-19 academic year takes account of the views of young people, their parents and Parliament. We have evaluated the current position of our universities, and on that basis, we have decided not to uprate tuition fees by inflation for the 2018-19 academic year. Students will therefore see maximum fees of around £300 less than if the maximum fee had been uprated with inflation.

The hon. Member for Reading East (Matt Rodda) mentioned that his constituents were struggling to repay the cost of their higher education. To help him put it in context, as a result of our decision to increase the repayment threshold to £25,000 with effect from April next year, if one of his constituents earns £30,000 per year, that constituent will be repaying about £1.20 per day. We think that is a reasonable amount for someone on that level of income to repay as a contribution towards the cost of their higher education.

[Alex Sobel]

Is it not correct that those earning far more will end up paying less because they will repay their loan much more quickly? The total amount of interest that they pay will therefore be far less than somebody on £25,000, who will take much longer to repay their loan.

[Joseph Johnson]

That is right. The amount that someone repays is linked to the amount that they earn in any one year, and the repayment will be more rapid for someone on a higher level of income.

The current student finance system removes the financial barriers for those hoping to study, and avoids students facing upfront tuition fee costs. We have maintained the universal accessibility of the system, which allows all eligible students to access the required finance, regardless of their background and financial history. Critically, monthly repayments depend on income, not on interest rates on their debt, or on the amount borrowed. From April 2018, we will increase the repayment threshold to £25,000, and adjust it annually in line with average earnings after that. That change will benefit around 600,000 borrowers, and will continue to benefit future borrowers. Many borrowers who have already graduated will see their monthly repayments reduced. That change forms part of a considered and costed proposal that reinforces the principles of our student finance system, and puts money back in the pockets of graduates.