Free at the point of study. Fair at the point of repayment
The Observer, 30 November 2003
We have to start from the beginning - where did top up fees come from and why?
It all starts from the fact that universities need more money and they need to expand to meet the future of our society and to offer real opportunity to young people.
Despite rising student numbers, between 1989 and 1997 universities saw a 36% cut in real terms to their funding per student. Since 1997 we have started to reverse this decline with funding per student increasing by 7% between 2003 and 2006. But this isn't enough, the backlog in university infrastructure is estimated at around 8 billion and university salaries have only increased by 20% since 1980 (against 60% for employees at large).
This is where the Tories erect a big "No Entry" sign. It is astonishing, not only do they want to ignore the funding problems that exist at the moment, but they want to take existing money off universities. By abolishing fees altogether the Tories would immediately rob the sector of up to 430 million. The direct effect is that the sector would shrink. In the long term without variable fees 250,000 potential students would be robbed of aspiration and opportunity. This is not fair and would create great bitterness and alienation in the younger generation.
This Labour Government believes that aspiration and talent should not be written off because of an old elitist argument that says more means worse. And the economic arguments hardly need repeating. We cannot compete internationally without a strong knowledge and skills base. Universities are the driver for this knowledge. We agree with the criticism that this country has a weak tradition of vocational education. That is why our Skills White Paper is so important and why we say that much of the expansion should be met through 2 year Foundation Degrees, (linked to business) to redress this imbalance.
Universities need more money based on economic need and social fairness and I say let's tackle this challenge head on. We must boost funding. We must increase the number of places. We must have world class research.
So we are faced with our next big choice. How do we fund this? More taxpayers money is one option. And this is where the Liberal Democrats put down their marker. But as Secretary of State for Education and Skills, I have to ask myself the question is this really fair? We already spend an average of 5300 per year on every university student, compared with 1800 on every 3 year old or 3200 on every primary school child. Universities already get the largest share of the taxpayers money spent on education. Should we increase this amount even though the latest OECD report shows that a UK graduate has one of the highest rates of return than any other country?
My proposals mean that the taxpayer continues to foot the largest share of the university bill. But we ask the graduates who benefit the most to make a contribution, rather than asking those who have never been to university to bear the cost.
So our last big choice is how students should make a contribution in a fairer way and this is where some of my Labour colleagues have expressed concern.
I believe university should be free at the point of use. Under my proposals parents or students who currently have to pay 1125 as the entry price to study will no longer have to find this before or during their studies. The recent student income and expenditure survey showed that a substantial number of students had to find nearly 700 towards fees because their parents were not making their assessed contribution. Under my proposals that inequity will end. That's fairer.
I believe graduates should contribute but only if it is fair at the point of repayment.
Graduates should only have to pay back the cost of their own higher education without facing life long tax. An individual graduate tax. That's fairer.
Graduates only make a contribution to the costs once they are earning over 15,000. That's fairer.
Graduates make a contribution based on what they earn, not on what they owe. The word debt is branded about but our system works on affordability like national insurance or pension contributions. That's fairer.
Graduates are never charged a real rate of interest, Government pay the cost of borrowing for the individual, so no-one is penalised for taking longer to pay back or career breaks. That's fairer.
Students from lower income backgrounds get extra financial support from the Government. Money to cover all or some of the first 1125 of the university fee will continue to be paid, and around one third of full time students will benefit from a grant of up to 1000. That's fairer.
Universities will have to make a wide range of bursaries available as a condition of charging a higher fee. Cambridge University have just confirmed that one in three of their students could be awarded up to 4000 per year - in addition to Government money. Many people would never have believed that such universities would be offering such incentives to the poorest students. It's a great step forward which I applaud. That's fairer.
And finally variability is a critical driver of fairness and quality. I know that this is controversial and some Labour colleagues want a flat fee of 2500 across the board. But I remain of the view that it is vital to vary fees from 0 to a maximum of 3000, across different universities and between different courses. This reflects the reality of our diverse higher education system.
To insist that every student on every course at every university pays the same amount would be grossly unfair. Every university would be forced to charge the same amount across the board irrespective of the demand, nature or quality of the course and the potential rate of return for the student. How is that fairer?
Ironically a flat rate of 2500, which is the level suggested by many colleagues distributes money from the poor to the affluent. How is that fairer?
These reforms are a package. Not a pick and mix solution. They are generous to students. They are fair to universities and the tax payer.
What's at stake is the future of the country's higher education system. We have to have the courage to reform. A reform which is steadfastly based on Labour's values of opportunity and fairness. A policy for the future. A policy of fairness.