The Liberal Democrats and tuition fees: lessons for the Conservatives today

Whispers coming out of Westminster suggest that the government is considering responding to the Augar Review into post-18 education funding by reducing the level of university tuition fees, even though any cuts in fees which are not reimbursed by general taxation risk access schemes being cut, science courses being dropped, or a reduction in funding for research.

Perhaps it is not surprising that the government is wary of the political costs of raising tuition fees given the fate of the Liberal Democrats since their notorious u-turn on tuition fees in 2010. However, I recently interviewed several senior figures involved in the Liberal Democrat decision at the time, and their experience offers the current government some lessons for how to respond to the Augar review in a way which retains funding to universities without losing political support. Most notably, the Conservatives should look again at a graduate tax solution to satisfy both policy and electoral aims.

The Liberal Democrat experience

The Liberal Democrat u-turn on tuition fees is the result of the party’s leadership never having truly committed to abolishing tuition fees, and of the constraints placed on policy choices by the prioritisation of austerity. In December 2010, just six months into having entered office as part of a coalition with the Conservatives, the leadership of the Liberal Democrats supported trebling the cap on tuition fees to £9,000 after over a decade of the party campaigning to abolish them altogether.

Despite securing the support of 45% of students and gaining several university constituencies in the 2005 election, senior Liberal Democrat MPs tried to drop the party’s opposition to fees before the 2010 general election. They felt that it was an expensive policy commitment which generally benefited those who were already better off, but were forced into keeping a commitment to phase out tuition fees in the 2010 manifesto by elected members of the party’s Federal Policy Committee.

In line with their manifesto, Liberal Democrat candidates signed a NUS pledge to not for any increase in tuition fees. However, the leadership resolved to not make abolishing tuition fees a red line in any coalition negotiations on the basis that they had other policy priorities, and the coalition agreement signed with the Conservatives allowed for Liberal Democrat MPs to abstain on the government’s response to the forthcoming Browne review into HE funding which was widely expected to call for an increase in student contributions.

How did the Liberal Democrat leadership intend to square the circle of honouring their commitment to abolish fees without adding to the deficit that the coalition had made their overriding policy objective? In the summer of 2010, the Liberal Democrat Cabinet Minister responsible for Higher Education policy Vince Cable was working on a graduate tax solution with the tentative support of the NUS, which would have avoided the language of “tuition fees” and made clear that students would only have to contribute on the basis of what they could afford.

A lack of a solution

However, this grand plan went awry when it was discovered that there was no way around the fact that were the government to fund universities upfront and then recoup the costs from later taxation, this would count towards the deficit. Instead, the system of students in effect incurring a bill for their tuition to be paid off once they are earning over a certain threshold was classed as a government “asset” rather than expenditure.

This left the Liberal Democrats in a quandary. They could either act as the coalition agreement allowed and abstain on the fee increase recommended by the Browne review, risk the government breaking up by voting against the fee rise, alternatively work to find a policy solution that best satisfied their policy priorities.

With MPs on both sides of the debate refusing to hold to a line of abstention, the leadership decided to prioritise their policy objectives both by remaining in government and engaging with the government’s response to the Browne review:

There were plenty of other policies which frankly I think people in government for the Liberal Democrats believed in far, far more which we wanted to pursue. Frankly we weren’t willing to throw it all away over a policy of which numerous attempts were made to refine or ditch in the run up to the 2010 election. (Interview with former Special Adviser, 2018).

This eventually led to the party supporting trebling the cap on university tuition fees from £3,000 to £9,000 a year, after considering that attempts to repackage the reforms as a graduate contribution rather than tuition fees would be seen as disingenuous and prone to delay, and having decided to get on with the reforms following pressure from universities for their financial settlements to be secured.

Electoral miscalculations

Whist it is impossible to fully isolate the effect of one policy decision on support for the Liberal Democrats, almost a decade on from the event the party’s u-turn on tuition fees remains a heavy burden on their reputation. Interviews with those who took the decision revealed several reasons why the electoral consequences were miscalculated.

“Blair got away with it”

Many of the former advisers I interviewed recalled a belief that since the Blair government had u-turned on introducing top-up fees but still secured another term in office, the Liberal Democrats would also be able to weather the storm.

However, given that the Liberal Democrats were the main beneficiaries of student discontent over the Labour government’s decisions on top-up fees and the Iraq war, it seems to be a remarkable act of cognitive dissonance for the party’s leadership to have assumed that the same voters would not abandon them over a similar u-turn.

Failure to inform public opinion

Universities had been lobbying the government that several of them were on the verge of going bust and therefore reforms to student fees were urgent. However, these debates were not heard outside of Whitehall and one of the biggest regrets of Liberal Democrat decision-makers is not having forced universities to come out more publicly and make the case for why they needed additional funding, as that may have increased public support for higher tuition fees.

Making assumptions about voters

The Liberal Democrats carried out almost no public opinion research in their first couple of years in government to understand the potential electoral effects of their decisions. Instead, assumptions were made that they would benefit from helping the Conservatives improve the economic outlook and would be rewarded for delivering the four policies on the front page of their manifesto, of which tuition fees was not one.

However, even if the central party had focused on the four front page policies during the 2010 election campaign, individual constituency campaigns often highlighted other policies including tuition fees, and given that the party’s position on fees was both long-established and clearly distinct from the position of the two major parties, it was a mistake to presume that the party was no longer closely associated with the policy even if the national campaign had barely mentioned it during the 2010 election.

Lessons for the government

The Liberal Democrat experience on tuition fees offers three areas for the Conservatives to consider when responding to the Augar review.

1. Frame the debate

How policy debates are framed can have significant effects on the levels of support for policy proposals. In the UK, the policy debate on funding universities become stuck on the level of student contributions, with little dialogue about the potential cost to general taxation, or the wider economic benefits of higher education. Recent contributions from Conservative MPs do nothing to change this. As long as the policy debate revolves around how much students should pay without considering the knock-on consequences, the most popular position will likely always be to reduce or abolish tuition fees.

2. Be cautious about assuming political benefit from reducing tuition fees

A common heuristic in political decision-making is to consider the most recent similar scenario, so today’s leaders may well be haunted by how tuition fees remains a burden on the Liberal Democrat reputation several years later, just as the Liberal Democrats may have been complacent following the Blair government’s experience with top-up fees.

However, the anger at the 2010 increase in fees was largely directed at the Liberal Democrats for performing a u-turn, rather than towards their coalition partners the Conservatives, so why are the governing party now so sensitive to concerns about high tuition fees? It seems unlikely that the Conservatives will attract student voters simply by matching Labour’s position on abolishing fees, and recent polls show that the UK public is very much split on whether fees should be reduced and also relatively unconcerned about the issue.

3. Reconsider the graduate tax option

The Liberal Democrats came into office naively hoping that Whitehall would have a policy solution for funding universities which did not require them to break their pledge to not raise fees. The closest they came to finding this holy grail was the graduate tax solution, which had some drawbacks including that it removes the link between students and their institutions so that Universities are reliant on the Treasury for their funding, and that it is difficult to tax those who move abroad.

However, the main reason why the graduate tax was ruled out was that it would not have reduced the government deficit. The recent decision by the ONS to reclassify some of the current University funding arrangements as government expenditure removes one of the advantages the current system has over a graduate tax solution. Adopting a graduate tax would allow future debates around university funding to avoid the loaded term “tuition fees” and would present more clearly to voters that students would contribute according to how much they had financially benefited from their university experience.

Higher education looks set to be one of the major policy agendas of the government once the all-encompassing issue of the Brexit withdrawal agreement has been resolved. Whilst the Conservatives may perceive that there is an electoral benefit to reducing tuition fees, doing so could have negative policy consequences. Evidence from the Liberal Democrat experience suggests that a graduate tax solution could avoid both bad politics, and bad policy.