Saturday, January 22, 2011

Tuition fees and intelligence flawed

Late on Thursday I was about to hit the sack when I was distracted by the 10 O'Clock Live show. The comedian David Mitchell was interviewing David Willetts, minister for Universities and Science. I was expecting a light hearted piss take, maybe the odd Ben Elton style jibe; it's brave of him to go that show said Jane, as I readied for some topical humour.

What followed was the most intelligent debate I've yet heard on the proposals to increase university tuition fees. Mitchell contrasted the proposals to the system of free education he and Willetts had enjoyed - did the Government regard this as progress? Wouldn't fees of £9,000 p.a. deter the very people the Government wanted to encourage; was there not a case for scholarships; what about subjects (such as Classics) that would be unlikely to 'payback' with higher earnings; wouldn't the proposals reduce social mobility?

And in response Willetts made considered, well spoken, non-avoiding answers. The introduction of student loans had encouraged take up - 40% of young people now progress to higher education. He hoped the new proposals would not be deterrent; the earnings threshold for repayment had risen to over twenty thousand pounds; the best universities would prosper and the poor quality courses decline.

But despite Willetts' measured tones, the more I listened, the more I sensed something wasn't quite right - perhaps it was his smirk that gave him away?

Central to Willetts' position were two considerations. Firstly, he argued it was unfair for the general tax payer to be funding the education of those who will go on to be higher earners. Furthermore, he claimed that the average graduate would, across their lifetime, earn one hundred thousand pounds more than a non graduate - surely it was reasonable they should pay back the cost of the education which had facilitated this.

At first sight these arguments appear plausible, but on reflection, it seems to me they are deeply flawed.

If we think about the claim that having degree leads to an increase in life-time earnings of one hundred thousand pounds, then presumably these earnings will be taxed. And even at a basic rate plus national insurance it must mean that the average graduate will contribute additional tax which more than covers the cost of their tuition fees.

Willetts' own words reinforced this conclusion when he claimed that there was a correlation between the number of graduates and the number of higher paid jobs. In justifying the 40% of young people going to university,  he said it was not just a case that graduates competed more effectively in the existing wage pool, but rather that the presence of more graduates led to an overall higher wage economy. So by his own logic, it must also lead to more taxable income and revenues.

Putting it crudely, and using the terms of Willetts' own logic, the government is expecting graduates to pay twice. It isn't difficult to see this - it is simple maths - and Willetts must know it too. It was a pity that Mitchell didn't challenge him on this obvious point.

But it was Willetts' first argument that irritated me most: the claim that it is unfair for the general tax payer to subsidise higher education because they don't directly benefit.

Let's leave aside that this is a gross misrepresentation of the tax system and the percentage of revenues accruing from the 'general public'. And let's not question the numbers of 'net gainers' from State services against the numbers of 'net payers'. Let's also not get into arguments about the benefits of a high value economy, driven by technology and services which require an educated and skilled workforce, increasingly of graduate standard.

Instead let's just examine the claim at its most basic level - that those who don't directly benefit from services should not be expected to subside those who do. Isn't that reasonable; plausible; fair?

Well if it is, why don't we fund the National Parks with an entry fee instead of State resources?  Not everyone likes the Arts, or visits museums, or plays sport  - why are we subsidising these out of general taxation? And what's so special about graduate education - there's probably just as big an earnings correlation with A-levels; why don't we charge for those too? Or how about prisons - we could levy a tax for the cost of qualifications received at her majesty's pleasure. Come to think of it, why stop at education; I'm pretty healthy - I don't see why I should be funding those who are ill.

Some of these examples are more analogous to tuition fees than others - if I took more time I'd no doubt think of better ones. But the general point is that tax has never been confined to redistributing income to the least fortunate. In practice, tax revenues in a modern state system are also used to fund services that benefit society as whole. If we start salami slicing that ideal and claiming this or that service ought only and on principle to be funded by those who directly benefit, then we quickly weave a web of inconsistencies.

The irony of Willetts' sophistry is that the plain truth is a more powerful argument. Why, I wonder, didn't he simply say, 'Of course increasing university fees is regrettable, but in the difficult circumstances we judged it to be a better course of action than reducing other frontline services'.  I might disagree with that claim; I might take a polar opposite position on the relative merits of education versus, say, the armed forces - but it wouldn't matter, the argument in itself would be sound.

Perhaps it's the philosopher in me, but I especially loath the type of rhetoric Willetts tried to pass off as logic. I'd rather we had an honest debate about what we can and can't afford, than the blind alleys of a pretence which claims there is some deeper fairness behind political decisions. David Mitchell led a good debate on Thursday; it's just a pity that in the end it was Willetts who sounded more the comedian.


  1. And a greater pity that you weren't on the show to put your clear-headed arguments to Willetts yourself! Well argued, sir!

  2. Ditto Steve's comment. I would also add that we all know that having a degree is no guarantee of getting a well-paid job, or any job at all. Even amongst my own small circle of friends with offspring in their twenties, the one I know with a degree hasn't been able to get work other than temporary work which has nothing to do with her degree at all, and even this comes to an end in a few months, with nothing on the horizon. Just glad I am not at the university age, or with children who are.
    And thank you for the green bag, I have emailed you with a dumb question but I am sure you will know the answer!

  3. I too am suspicious of the positive claims made for student loans. Whereas 40% of young people go on to higher education, it is by no means clear that this is because of the introduction of student loans. I don't recall means-tested 100% grants being much of a deterrent.

    If graduates earn on average £100,000 more than non-graduates (and that's only an average figure) they will pay about 50% tax on it, leaving £50,000, and if they have to pay back £27,000 for a three-year degree course, they're £23,000 better off over a lifetime's work, say 45 years, say £500 a year. Doesn't sound too much of a deal to me. An inexpensive meal out for two every month?

  4. People with degrees (many of which nowadays aren't worth the paper they are written on) still earn masses more than those without - in general. So although I am certainly not of a right-wing persuasion I see nothing wrong with students paying back a loan. I don't see why my son who did an apprenticeship and earned a pittance while he did it should subsidise university students. I paid for my OU education and worked though my nursing degree, again it was for a pittance. Rant over Mark, sorry....

  5. Like Mark in Mayenne, I too pounced on the notion of graduate lifetime earnings being £100k higher than for nongraduates. I assume this is an average of some sort, and there are therefore going to be many, many graduates who don't benefit from this much extra income. Even for one who does, there's not much left if we take off the cost of tuition fees, the cost of living whilst at university for three years, and tax. Add to this the risk of unemployment that being a graduate does not take away, and the serious cost once facing the job market of have sacrificed three year's worth of work experience for a non-vocational, possibly worthless qualification.

    Due to cuts in funding, this year many undergraduates I know have watched the staff and courses taught in their departments slashed to a bare minimum. In one case there aren't even enough courses available to gain the requisite 'course credits' in any given year to pass, so second years must take third year courses and so on. What will be left to study in their actual third year remains in doubt.

    They have paid high tuition fees, and had to find money to live on, whilst committing to three years of study. What they are getting in return would have been deemed unacceptable when I was in their position, when my education was free and there were so many courses and extras on offer the only shame was not being able to do all of them. Now, as costs go up, actual teaching time and opportunities for academic development seem to be going down. Still, I suppose that leaves more time for students to do paid work between lectures...

  6. Government tends to be about priorities rather than fairness, but I can see why discussion of priorities is something ministers would wish to avoid.
    People might be encouraged to discuss what those priorities should be and how they might be put into action....
    Raising the question of 'fairness', being more abstract, diverts discussion into the byways.

  7. I have a solution to the crisis in further education, and the scourge of rising street crime, all in one:

    Shut down half the universities, (the poorest ones) and make Degrees a thing to strive for once again. Halving the student population might make 100% grants affordable once more.

    Turn the shut universities in to prisons, and scrap these lenient "community service" punishments that don't get served anyway.

    Just a thought.

  8. It is an interesting debate. £100k more over the space of 40 years is only £2,500 pa more. If the average wage is approx £25,000 then graduates are (on average) earning approx £27,500. Not a huge amount from which to pay back £27,000.

    There are many flaws in this analysis, but I hope it makes a point.

    I, too, benefited from a free university education, and I'm sure many would be distraught that now I am a stay-at-home mum. But my education is helping me fight for my daughter, debate with my son, understand their homework, challenge them with new words and life experiences. They will - I hope - be better people for it, contributing to society in general. As, indeed, do I.

  9. Let me be clear, too, I also benefited from a free university education, and I believe it helped me in my career. I more than paid back the cost of my education, with a bit left over for me too.

    I think that a better-educated parent is (all other things being equal) a better parent, and pays back the investment tangibly and intangibly.