Few have described the challenge of the future as well as Britain’s Royal Society: ‘unless we grow smarter’, says the society ‘we will grow poorer’. And that is why we need to fix the broken finances of our nation’s universities.
As the Organisation for Economic Cooperation and Development warned last week, Britain faces chronic gaps in productivity with our global competition. The United Kingdom’s productivity gap with the rest of the G7 is at its highest level since 1991. Skills gaps are getting worse. And more than ever before, our young people – the first generation in a century to be poorer than those before them – need an affordable chance to study to be the best they can be.
Meeting these challenges demands a higher education system that is fit for the future. Our nation’s universities are quite simply too important – and too good – to fail. But this government has put a debt timebomb beneath them.
A slew of alarming reports have now flagged how the Tories’ student debt shambles means today’s system going bust. The business, innovation and skills committee warns the government is rapidly approaching ‘a tipping point for the financial viability of the student loan system’. The Institute for Fiscal Studies says nearly three quarters of graduates will never pay back their debts. The Higher Education Commission fundamentally questioned ‘the stability of the system’.
Last week, Labour revealed the Department for Business, Innovation and Skills had to be handed an extra £2.1bn this year to cover losses on student loans, while write offs are expected to soar to an incredible £20bn a year by 2044, with the Tories’ system adding £281bn to national debt by 2031.This is a quite simply clear and present danger to British science, research and training for a generation to come – and it is a risk we simply cannot afford to run.
That is why Labour is proposing big reform and a big choice: to cut tuition fees from £9,000 to £6,000 from September 2016, benefiting students who began studies last year, with an increase in grants of £400 for everyone from families earning up to £42,000, benefiting over half of students.
Thanks to the Tories and Liberal Democrats, students today will graduate with a whacking great debt of £44,000. It is a bill so big that three quarters are forecast never to pay it off and that is why fees have got to come down. We have also heard loud and clear the message of the National Union of Students and others who have told us that the cost of living confronting students from low income families is creating a world in which campuses are becoming homes to payday lenders. We cannot have that. So extra grants will help – on top of which students will keep their current maintenance loan eligibility – and we will look at making support payments monthly to help students with their budgeting.
Our package means that national debt will fall by an incredible £40bn by 2030-31, with over £10bn saved in the next parliament. Those are savings that will safeguard the sustainability of the system and ensure fees do not have to rise in the next parliament – a guarantee the Tories and Liberal Democrats are refusing to make.
In the long term, our ambition must be to move to a fairer graduate tax. But unlike Nick Clegg, we will not make promises we cannot guarantee to keep. So we will make some hard choices. There is no question of us shortchanging universities, their research or teaching. So we will fully fund the change with £2.9bn raised by restricting pension tax relief for people on over £150,000 to the same 20 per cent rate that basic rate tax payers enjoy, and continue the government’s policy of limiting tax free pension pots to £1m – enough for a pension of £50,000 a year. And we will raise £200m more by asking the richest future graduates to pay one per cent more interest on their student loans.
For those who agree with the Royal Society, the choice at this next election is now clear. Between a Tory party that will let our higher education system go bust threatening the future strength of the British science base; that will jeopardise our relationship with Europe, where the United Kingdom wins nearly a quarter of European Research Council funding delivering over £1bn of British science; that will continue to damage our position in the global market for international students with shortsighted immigration policies which have delivered the first fall in international student numbers for 29 years and a fiscal plan which could see the business, innovation and skills budget slashed, shredding investment in skills and apprenticeships.
Or they can choose a Labour government that will make the difficult decisions needed to fix university finances for the long term, strengthen our relationship with Europe, take international students out of the net migration target, lift the debt burden from today’s generation of students and transform access to higher education with for those who want to take an academic or a vocational route forward with a new generation of technical degrees, delivered by colleges, universities and employers together. It is a plan for sustainability to protect British science, to transform our skills base and to kickstart social mobility once again.
Over 50 years ago, it fell to Harold Wilson’s government, determined to harness the ‘white heat’ of the technological revolution, to drive through the groundbreaking report of the Robbins Committee and bring the opportunity of higher education within the reach of a new generation.
Today, Britain confronts a world changing faster than ever. Where our competitors are investing in skills and science like never before. Where the possibilities of technology hold extraordinary potential to transform our economy and public services. To stay ahead we need universities built on rock not sand. And that is the plan we offer.
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Liam Byrne MP is shadow minister for universities, science and skills. He tweets @liambyrneMP
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