Progress | Centre-left Labour politics

Costing the taxpayer more than in the first place

The changes Labour made to the nation’s higher education left not only world-class universities but a world-class university system. Today we have seen, clear and present, that there is a real danger the whole system is now sliding off a cliff.

It is not simply the big annual cuts to the science budget that chip away at the core; it is the fact that the Tories’ loan system, voted through by the Liberal Democrats, has now turned into a money pit.

Figures published today in answer to my questions in parliament now reveal that, despite tripling fees and loading up students with debt, the coalition has created a system that does not actually save the taxpayer a bean. It is incompetence on an industrial scale and it is now threatening the jewel in our national crown.

Since I became the shadow minister for higher education, skills and science, I have travelled the country to speak with the students and staff at work in our universities. I have been inspired by their energy and engagement in intelligent enquiry into the world around us.

Opposition carries with it the duty to question the assertions of the government of the day. Questioning is the means to securing truth. Universities do this every day, of course. At its best, parliament too can be a marketplace of ideas, as questions challenge and illuminate the issues at the heart of our country.

So in parliament I have been pursuing my own inquiry into just how much money the government anticipates it will be unable to recoup from the student loans it administers. It is a figure that appears on the nation’s balance sheet and, rather alarmingly for a government that claims to place fiscal responsibility at the heart of everything it does, it is a figure that has exploded over the last three months.

My first question on the matter was put to the minister for universities and science, David Willetts, in early December 2013. His brisk response was that the RAB charge then was 35 per cent. Now, losing a third of the taxpayers’ money put was already pretty alarming, so subsequent questions followed. In February, we were told that the charge had increased to 40 per cent and, just this week, Willetts told us that it had risen again, this time to 45 per cent. You do not have to be an accountant to spot the trend.

What does this mean in the real world? It means that the new charging regime will actually cost the taxpayer more than the system it was brought into replace. London Economics, just last week, suggested that a RAB charge of 48.6 per cent would lead to this (the internal BIS figure is even lower – 47 per cent – but then, since they seem to revise their methodology on a regular basis, it is difficult to trust this figure, as it is likely to be changed again before the ink is dry). Think about it: all that mess the Liberal Democrats got themselves into and the giant wrecking ball that was swung towards our universities by the coalition – it was all for nothing.

Willetts will probably tell us that the RAB charge will change over time; he will say that wages will increase. Yet his government hardly has a good record in this area. Responsible for the cost of living crisis, earnings have risen slower than inflation for every year of coalition government and, what is more, the RAB charge issue has created a black hole in BIS financing. This means that a funding gulf has hit universities and hit them hard, with HEFCE announcing a six per cent reduction in teaching grants this month.

Growth in our country has been powered by education, both further and higher. Higher earnings depend on developing and increasing our knowledge and research activity, investing in apprenticeships and pursuing a real agenda for skills. As they sink into a financial black hole of their own making, Willetts and his colleagues in BIS remain distracted as their plans unravel. They are unable to focus on the UK’s core needs.

So, here is a deal: I will keep holding Willetts to account. I will keep questioning and querying but, like the inspiring folk I have met in universities since taking on my new role, I will also search for a solution. I will listen to and take into account expert opinion.

I will work with others and ensure that a Labour government in 2015 will deliver a higher education system that works, a system that is transparent and effective, a system which is the backbone for our nation’s growth and prosperity, as we once again lead the world in innovation.

The only way out of austerity is innovation. A bigger knowledge economy, offering more jobs with better wages. Our nation’s universities and the graduates they train are fundamental to delivering that kind of future.


Photo: Tom Allender


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Liam Byrne MP

is member of parliament for Hodge Hill

1 comment

  • RIGHT. The tuition fees regime is failing. It needs reform, along with non-compulsory education as a whole. Three key errors are [1] the fragmentation of post-school education into ‘vocational’ and ‘academic’ – both benefit employers, both are underpinned by research and [2] the absence of a ‘whole-life’ integrated strategy for life-long learning [3] the absence of recognition that a key beneficiary of my education is my employer. Used properly, MOOCs can help turn this situation round.

    RIGHT. “Innovation is the only way out of austerity.” Dead right. BUT – and it’s a big but – you can’t divorce innovation from R&D. And research (increasingly along with development and innovation) is an instance of market failure. The only way out of market failure is with new or different business models. Those new models must involve the more effective use of public funds .. i.e. reform.

    WRONG. The notion that the UK will “once again lead the world in innovation” is not simply hubris: it reveals a lack of understanding of how Research, Development and Innovation (RDI) work in the world today. RDI is transnational in character (in physics: CERN, ESA, ISS, ITER; in health: IMI). And it contradicts what Liam has written elsewhere e.g. in ‘Turning to the East’ he advocates global RDI collaboration especially between city regions as the only way forward. What Liam needs to say on the UK is that “The UK will seek to blaze the trail in ever more open and transparent international collaboration to address the great challenges of health, energy and the environment that face all humanity. It will address those challenges so that the public good takes precedence over private gain”.

    UNSATISFACTORY. The “knowledge economy”. I used to fling this term around. I picked it up off Will Hutton. But it is unsatisfactory. It locates RDI in the service economy when RDI is also very substantially in the manufacturing economy. The fact is that researchers want, at the end of the day, to make new stuff or to enable others to make new stuff.

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