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Dear Alan
Like much of the Party I`m worried about top-up fees, or whatever name we`re now giving to the post paid fees for university education which were trailed in the Queen`s Speech. So I`d very much appreciate a briefing on the issue. In particular I`d like the answers to some specific questions which arise. I hope these could be answered before the briefing so that they can be further discussed at it.
I`m afraid the list is a long one but I would very much appreciate answers.
(1) We announced in the last manifesto that we`d not legislate on this in the present Parliament. Now we are. Why? What`s the urgency? What do we know now that we didn`t know then?
(2) The central university problem is the need to increase participation by the less well off and manual workers. What research has been done on the effects of the abolition of maintenance grants and the imposition of fees in the last Parliament on participation rates from the different social groups and on the rate of increase in total participation before and after? Has any research been done on the likely effect of increasing fees on class and total participation in the future?
(3) We have just raised the level of earnings at which pay-back begins from £15,000 to £20,000. What is the cost of this? What would be the further costs of raising it to £25,000? What happens to interest payments before repayment begins? Do they continue to accumulate and compound when payment is delayed, at what percentage rate? Does this pay back provision apply to the student loans and am I right in assuming that the fees will just be put on the loan with it all collected back through the tax system?
(4) There have been newspaper reports, almost certainly greatly exaggerated, that former students are escaping debt burdens by becoming bankrupt. How many instances are there of this? Can students escape the debt burden in the new scheme by personal bankruptcy and will any measures be proposed to stop this in the legislation?
(5) Fees are being sold as a means of bringing desperately needed extra money to the universities. When and how will this reach them? Is it proposed that the fees will be paid by Government as soon as they become liable while pay back rests with the student? If money is paid to universities on this basis it amounts to another form of public borrowing so what is the effect on the PSBR? Does the loan scheme count towards it? How much money will come to the universities in the first year and what are the build up rates and the final figures, assuming say an average fee of £2000?
(6) The proposal is for an increase in fees to a ceiling of £3000. The assumption seems to be that only elite institutions will go to the maximum. What calculations have been made or supplied to you by the universities on this? I`ve also seen claims that to finance bursaries to encourage participation by the less well off all will have to go to the maximum. Has this been assessed?
(7) A justification for fees is that graduates earn more later in life, though on a priori grounds this differential should diminish as a higher percentage go to university. Has the differential benefit been calculated as an overall improvement benefiting all graduates or has it been analysed by university and course? I would anticipate that Oxbridge graduates would earn more over lifetime (always excepting the more incompetent like myself). Do they? On a priori grounds it must be that lawyers, accountants and medics get higher earnings as a result of their courses, while mere historians like myself don`t. Have these differential by course been calculated? If they exist what is the argument against higher fees by course as well as university?
(8) What calculations have been done about the correlation between a university`s need and its ability to raise fees? Thus are the financial needs of the elite universities greater than those of the struggling bodies such as the University of Lincolnshire and Humberside? How do the problems of the former Polys and the older universities compare? What of the argument that the elite universities break even on undergraduate teaching but need more money, mainly to maintain excellence in research? Is this correct? Has it been assessed?
(9) Much of the opposition to higher fees comes from old fogies like myself who don`t like to kick away the free ladder we climbed. It is important to know, therefore, what the costs would be of financing the pressing needs of the universities out of public spending. What is your estimate of what they need? What assessment has been done of the benefits of raising it along the lines the Liberal Democrats propose by increasing the maximum tax rate for those earning over £100,000? How much would this bring in? I know Government is committed not to raise this higher rate but the information still needs to be made available so that Liberal claims can be combated. If necessary.
(10) If not general taxation what other alternatives have been considered? What would be the benefits of a graduate tax to fall on all graduates past, present, and future? This could be hypotheticated to education or, even more specifically, to the universities. Has this been looked at? What are its benefits and disadvantages and what assessment has there been of the way this works in Australia?
(11) There have been various mentions of a bursary scheme to help the poorest students from the least well off backgrounds. I`m not at all clear whether this is going to be a national scheme operated by Government or local schemes operated by each different university. Which is it? What calculations have been made of the cost and how much it would subtract from the increased university funding available through fees?
(12) Increased fees are being sold as an egalitarian, or more accurately perhaps as a redistributionist measure. This raises three issues.
(a) The first is the argument that the majority of the population who don`t go or don`t send their children to university shouldn`t have to pay for those who do. More accurately, that should read for increased spending on those who benefit because the costs of universities already borne out of public spending must be considerable. What are they? What is the increase in spending from which the majority could now be protected?
(b) In the old Labour Party this would be an argument for progressive taxation to finance higher education on the same basis as, says, the Health Service. Since New Labour is trying to be redistributionist without higher taxation on those most able to pay, it becomes important to know what research has been done and what evidence is available from the last few years of fee paying about the extent to which better off parents finance the education of their offspring so that kids shoulder a lower, or even non-existent, burden of debt when they graduate. Human nature being what it is, my guess would be that it`s those we used to call lower middle-class who will face the greatest difficulties here. If there is a middle-class backlash the main impact will be here. So what information is available?
(c) At the third level the redistributionist argument requires that money taken from the better off is transferred to the less well off. So am I correct in assuming that whatever the final increase in fees it will work on the same basis as our last imposition with the bottom third paying nothing, the next third a means-tested proportion, and the top third paying the lot? Will all be able to put the fees on their student loans as well as their living expenses, or does the pay back system just relate to fees?
(d) Finally, on this redistribution argument what calculations have been made and what expectations do you have about participation of the different economic groups at different universities? It could be argued that if the elite universities go for the maximum fee increase then they will be more attractive to the less well off than the better off, since the first have all their fees paid, the second have to pay more. On the other hand, I`ve seen arguments that the elite universities will become even more elitist. Frankly I`m confused. So what is your expectation and what basis do you have for making it?
I appreciate that this is a long list of questions, but I do feel that those who are proposing this change and persuading the Party to commit itself to it should be able to answer them.
It would have been preferable to have had a full enquiry reviving the Dearing enquiry (which we overruled last time). Since we haven`t had this and are being asked to make an even bigger breach in a longstanding Labour principle, we should be supplied with answers, as well as the arguments on which our position can be justified and defended. I`m also sending these questions to Ivor Crewe to see what answers he can bring to bear on behalf of the universities.
Yours sincerely
AUSTIN MITCHELL |
