Apologies for the length of this article.
There has been a lot of debate on Live! and elsewhere about the pros and cons of introducing top-up fees. My personal belief is that they are a very bad idea, ultimately detrimental to students from all backgrounds, as well as harming the reputation of the College. But that’s a debate for elsewhere. What I’d like to do is to explore the ‘What if …?’s. What if the idea of top-up fees is scrapped? What happens instead?
Clearly, the higher education sector generally is facing a massive funding crisis, due to a combination of chronic underfunding under successive governments and New Labour’s dream of expanding access. I don’t think there are many people who would dispute that. So the government has to plug the gap somehow. Assume top-up fees have been permanently ruled out as a means of doing that. What options are left?
Firstly, the government could insist on cost-cutting measures. Universities can streamline bureaucracies, introduce more efficient structures, cut waste and merge together to introduce economies of scale. This would save a large amount of money. To a point this is already happening (especially at Imperial) and it doesn’t seem to be releasing as much cash as we’d like – certainly not enough to cover the £3K Imperial loses on each student per year – and there’s only so far you can go before your super-efficient system is unable or unwilling to be improved further. In any case, any savings are more likely to be bulldozed into research in order to attract more funding in the future rather than to pay for education today.
Secondly, the government could encourage more entrepreneurship within universities. In Imperial, this is particularly successful, with one spin-off company starting up every month or so. But companies take a lot of time – and a lot of money – before they start to return hard cash to the university and not all of them survive to the profit- making stage. Although such entrepreneurship should be welcomed as an additional income in the future, we shouldn’t be expecting it to fill the gap for a long time, if at all. In the short term, it could even exasperate the problem, as funds are diverted into the fledgling companies.
So universities can’t really be expected to foot the entire bill by themselves. This means the government has to lend a hand, through the imposition of fees, a graduate tax, a hike in general taxation or the diversion of funds from other areas of government spending.
We’re assuming that fees are ruled out. It is also unlikely that, after many years of doing the opposite, any government would suddenly divert funding from other areas into higher education. Besides which, they would have to decide which area to divert it from. Hospitals? The Police? Primary Schools? It’s not a decision I would relish taking and I think most politicians would rather avoid the issue as well.
So we are left with two possibilities, both of which involve the word ‘tax’ and as such will not sit happily with MP’s election managers. But lets assume that the spin doctors can help to introduce a graduate tax without actually using the ‘T’ word – it is possible, as with National Insurance (or Health Tax, as it isn’t otherwise known). Could a ‘Higher Education Beneficiary Levy’ or the like do the trick?
Well, yes, assuming you charge as a percentage of gross income above a certain level in a similar way to income tax. That way, only those who do actually benefit from having their degree will pay for the privilege, and the more they privilege, the more they pay. That sounds fair. It also removes the scattergun approach of fees, which would depend on the parents’ earning potential rather than the student’s.
The money raised should eventually be enough to bridge the funding gap, as least for the foreseeable future. As access increases, more people will graduate, more people will earn more as a result and more funding comes back to the HE sector, in theory.
Yet a graduate tax will not bring in cash overnight. It is something that would need to be phased in over several years – a bit like fees – so the funding problem will continue in the short term. There is also the problem of graduates going overseas after university – how do we tax them?
The other alternative is a hike in income tax for everyone. Again, this could be politically damaging, but from the opinions I’ve seen expressed on news and discussion programmes, it certainly isn’t as damaging as top-up fees.
It is an idea that returns to the roots of free education for all at the point of use, which holds well with many people’s principles, fitting nicely into the welfare state framework. Yet should we, who are expected to be amongst the top earners in the country, really expect people who are earning the minimum wage to contribute to our education? That doesn’t really hold well against socialist principles. Asking people to pay for everyone to be healthy and survive if they don’t have a job is fine; asking them to pay for someone to earn a huge amount more money than them seems almost perverse. Then again, you could argue that these high earners will pay more tax anyway and so will contribute more to higher education.
As usual, the ineffectiveness of the NUS has helped to exasperate the situation. They have helped with the introduction of top-up fees, campaigned against a graduate tax and then protested against student debt. This apparent schizophrenia has led to a lot of confusion in the minds of the government and the general public about what the best way forward would be. With the media spotlight firmly on Imperial and ICU’s independence from the NUS, Imperial students have a chance to come up with a credible alternative to top-up fees and to get that alternative onto the political agenda.