After all the hope and fear over Augar, the sector now has something solid to work with

Imagine that you’re the incoming Secretary of State for Education, late last year. Or even that you’re the reappointed universities minister.

You sit down in No. 10 – clearing the used wine bottles off the table to make space for your iPad – and you’re told the following:

– The Treasury is pursuing an aggressive policy of fiscal consolidation, driven both by the Chancellor’s personal views, and the spiralling costs of Covid and knock-on effects onto other public services.

– The cost of the student loan book is ballooning and is predicted to reach over half a trillion pounds within 20 years or so – almost half of which will not be paid off by graduates and will have to be met by taxpayers.

– There remain very sound policy reasons to try and seriously address the skills and productivity challenges in the country, but this can’t seriously be tackled without looking at tertiary education in the round. And that this is politically very popular – including with, but by no means restricted to, Conservative working class voters.

– That the pathways for young people who do A levels and then university at 18 are great, but for those who fall off the ladder at any stage, or who want to go to university later in life, the options are poor – including because of mistakes the government made in 2010.

– That you have to solve all these things while recognising that we have widened access to HE considerably in the last decade and this has largely been a success; that desire among most young people to go to university is very strong; that the graduate premium remains high (albeit shrinking, and in certain areas, taxpayers are bearing an unsustainable burden); and that the HE sector offers significant economic benefit and soft power to UK plc.

What would you do? Other than ask if, perhaps, other ministerial roles were still available?

Tough gigs

For a long time, the sector hoped for one thing, and feared another. The hope was that this would prove to be just too complicated and that we would be waiting for a response to Augar like we waited for Godot. Always promised, never delivered. In the meantime, carry on.

The fear was that a Secretary of State for Education would crumble under Treasury pressure. That politics and pounds would trump policy and process. Fees would be slashed, no additional funds would be forthcoming to fill the gap, student numbers would be curbed, and quality would be sacrificed in order to balance the books.

But to the credit of the DfE, and to the ministers and officials, we haven’t had either. Instead, today’s package, while clearly not wholly delighting the sector, does in our view mostly show a highly credible result by DfE having played the cards it was dealt. (This is a jointly authored piece, so we’ll skip past the bits where we disagree with each other).

There’s no getting away from the fact that the overall package does deliver savings to the Treasury, and that the majority of those savings are borne by future graduates, as well as by universities. DfE’s own analysis suggests that the previous arrangements saw the funding of the sector balanced roughly evenly between the taxpayer and graduates, but only a quarter of graduates would repay their loans in full. Now, around half of all graduates are forecast to pay off their loans, with taxpayer subsidy falling to about 20p in the pound.

But the principle of burden-sharing is really important, and it’s important that it stays. Government recognises – even if it doesn’t talk about it much – that higher education delivers a collective and social good. Loans remain income-contingent. It is a regressive package, in that poorer graduates will bear more of the burden (as payment terms increase and repayment thresholds decrease), but part of what has made it regressive is the government having addressed what was also one of the most toxically unpopular bits of the old system, which is real terms interest rates now being abolished.

Quality matters

Today’s package also makes a welcome attempt to look at quality. Again, the sector has been hostile to much of the rhetoric from government. But if one can separate out message, and messenger, there is more consensus. After all:

we want to address concerns that some courses could deliver more for students, taxpayers, and employers…. and take consistent and more transparent approaches in tackling low quality or low value courses. The public needs full confidence in the value and quality of a UK university degree.

That’s from Universities UK President Julia Buckingham, last autumn. As a sector, we need to be mature enough to recognise that not all is where it needs to be, and that it’s not unreasonable for government to seek action on behalf of students and taxpayers.

And thirdly, and most excitingly from our perspective, the Lifelong Loan Entitlement appears to be flourishing. We declare an interest, of course, in that this has largely been pushed from government by one Alison Wolf. But for all the false dawns, we now have a clear indication, in black and white, that any student will have an entitlement to over £37,000 in today’s money to access either full courses, or modules, across multiple institutions, at any age, and across Levels 4-6.

A decent chunk of the savings banked from today’s increases in graduate contributions will be recycled back in to fund this commitment in future years. This is a huge shift. It’s the right thing to do, policy-wise – and when it would have been easy to nod to it but not fund it, this is not what is being proposed.

But almost as significantly as what was announced, was the fact that it has been navigated and delivered. The absence of traditional leadership from the centre, and the chaos of Downing St, has had an interesting consequence, in that we are now in a policy environment like the 2010 coalition government. Back then much of the government reform was not driven from the centre, but instead through the ideas and abilities of individual cabinet ministers and specific policy advisers. In 2010, that included school reform and Universal Credit. In 2022, in policy terms, that seems to mean Michael Gove’s devolution and Nadhim Zahawi’s skills and HE reform.

It’s clear that there is much in this package that will concern some in the sector – and indeed, bits of it that concern us, such as an increased tax burden on people in their twenties and early thirties. But in delivering a package that takes on the challenges outlined, and recognising that some of the more complex issues need further consultation and discussion, rather than rushing to conclusions, the ministerial team deserves credit for balancing conflicting demands, and juggling policy and politics.