This refers to the reform of the university funding system where we see politicians who, in the main, have benefitted from free university education now debating a newly devised plan to allow universities to introduce some form of charging students who will pay after finishing their courses and start earning above a defined level of pay.
This plan has raised a storm of controversy. Why should students now have to pay when previously students did not have to? The answer is that at one time only 5% of the secondary school population went on to higher education whereas the percentage is now approaching 40% and is expected to level out at 50% and the taxpayer can no longer bear the full burden.
Why then do we need to have 50% of secondary school leavers going through universities? The answer is less clear. To maintain our position in the world where more and more countries, with highly educated citizens, are pushing to achieve our levels of economic success, we have to keep up. There is also the fact to consider that in a high-tech society full employment is difficult to achieve and it is inadvisable to have large numbers of young people without occupations.
The need to change is because the public have shown they will not vote to fund certain charges with tax payers’ money. This has resulted in the present government adopting all sorts of opaque strategies for getting around the problem. Schools and hospitals and other public buildings are being constructed through a system of Public/Private investment in which private money constructs and administers buildings and charges for these over a period of time. This process pushes debt on to successive generations.
With tax payers unwilling to fully fund their health and education systems it is not easy to make a case for university students’ educations to be funded from the public purse. The Conservatives would prefer to privatise higher education in the manner it is done in the USA. The Liberal Democrats would increase income tax on those earning above £100k to fund the universities and Labour (New) propose to adopt a half way policy.
To support the idea of making students pay for their university education it is argued that, over a lifetime’s work, graduates will receive considerably more earnings than non-graduates so it is right they should pay for this privilege. But, if it is a privilege for them it is also a necessity for private and public organisations and equally so for the government, representing society, to have these graduates. So, what is the solution?
When the graduates enter the work force and start having to pay back the costs of their university education they will also be thinking about marriage and consequently buying a property and settling down so that the cost of their mortgages will be in addition to their education repayments. At the same time the present system of them contributing to an occupational pension is falling apart as Companies maintain they cannot afford these type of pensions and are beginning to offer their employees cash purchase pensions that have no guarantee.
Our young graduates, already struggling with educational repayments, mortgage repayments and contributing towards non-guaranteed pensions are next expected to raise a family and, perhaps by this time, paying for all, or some, of their childrens’ education and health care. All this time they will be drawing nearer to the ticking time-bomb when they, the current tax-payers will have to pay for the accumulated costs of the schools and hospitals built with private money 20 or 30 years previously.
The proposed system for making students pay for their university education is a step too far and, in my view, will prove to be the straw that broke the camel’s back in future years. Of course, if the camel’s back does break, the government of the day will either patch things up or be replaced by another government who will do likewise. Another scandal hastily patched up and swept under the carpet.
It is not fanciful to suggest that if the government’s plan for higher education top-up charges are approved by parliament it will result in the establishment of an embrionic market. Nor is it unrealistic to suppose the consequences of following this event to its logical conclusion, although not necessarily in the same order as set out below. League tables will emerge, pre-supposing a premier league of universities, followed by first and second divisions. The premier league would be closely linked to the outside markets they would virtually serve. Some of the universities could be floated on the stock exchange such as football clubs are now. Major international corporations such as Microsoft, Pepsi-Cola or Shell will attempt to buy controlling share holdings in the more successful commercial universities while Russian or Chinese billionaires would buy some outright. The first and second division universities would cater for the arts, vocational subjects, academic interests unless, or until, the critical mass of any course would fit it to be counted as commercially viable to be promoted to the premier league; as the new league system would have a built-in promotion or relegation mechanism based on commercial success. There would also be created a form of transfer system for top professors, lecturers and researchers to follow the progression of the high rising universities.
As the market develops, the government of the day will ‘tidy matters up’ by floating all the universities not reaching individual plc status under a railway-type privatisation plan – separating land and buildings and intellectual assets so that each can be exploited in its own way.
The debate as to what is an appropriate percentage of secondary school leavers should go on to higher education will become arcane as market forces will decide this question. The privatisation of public services and the marketing of sports has shown what might be possible for higher education and politicians are doubtlessly thinking well ahead of the curve.
The opening of this Pandora’s box will lead to most of the above forecasts coming true as well as other unforeseen ones and the City of London is certainly watching the developments with keen interest after the successful foraging raids on housing, pensions, railways, water. insurance etc.
To save the universities from destruction by the markets I should like to put forward a proposal based on the question of who are the main stakeholder beneficiaries of higher education? First are the graduates, second are the organisations that employ them and third is society. Before trying to establish any sort of formula to determine the total cost and the percentage each group should pay and in what way the payment could be made let us put the divisions in general terms.
GRADUATES – So as to ensure that all those with skills and talents that can be used for the benefit of society have access to higher education there should be a flexible system for each graduate to make their contributions and only on a basis of ability to pay throughout a lifetime’s working.
ORGANISATIONS – Those eligible should only pay their portion as a levy on each graduate employed.
SOCIETY – Will pay up-front through taxes on a cost per student basis and will therefore have control through a government guaranteed public corporation.
A brief analysis of the advantages for these three groups is that the graduates can opt to pay before, during or after their studies but as payment of the loans would only be required when a certain level of income has been reached, most would opt to pay after graduating. As organisations will only pay a student levy as and when they employ each graduate, this payment becomes an asset created by the investment. There would be no problem in the development of a student transfer market so that transfer payments follow the graduates throughout their working life and this could be built into employment legislation. Thus, there would be a real reason to assess the merits of employing graduates or non-graduates as well as creating more in-house training. It would also tend to balance out uneven supply and demand surges which would feed back to initial sources of subject courses so that more rational numbers for start up in each subject could be planned. Businesses recruiting graduates from public or non-profit making organisations would be required to pay the graduate levy as they would for recruiting foreign graduates. As society has paid up-front through taxes this will result in the free access to the graduate pool for all public and non-profit making organisations and such organisations will pay no student levy when first employing a graduate or when taking on a graduate from the private sector. Graduates in self employment will pay their levy on a deferred basis.
A non-profit making trust could be set up to receive and administer funds from all sources and would work in tandem with a Regulator and Ombudsman. The benefits from the above proposals are too numerous to mention here but the main benefit would be to modernise the structure of our universities while saving them from the uncertain fluctuations of the market place and political ideologies.
7 SEPTEMBER 2004