Monday, 15 November 2010

Why the proposed increases in Tuition Fees are abhorent - Labour favours a Graduate Tax

• Labour will be opposing the Government’s proposal to increase fees to £6,000 with a maximum cap of £9,000 a year from the 2012/3 academic year.

• The Government’s proposals will make our universities some of the worst publicly funded and with the highest fees of any public university system in the industrialised world.

• Labour does not support the way the government is ripping up the principle of a partnership of publicly funded universities alongside student contributions

• Instead the Government is withdrawing 80% of public money for university teaching and transferring the whole cost of degrees onto most students, saddling them with huge debts

• We don’t think the system is sustainable, fair or progressive and will lead to students choosing the course they can afford not the course right for them

Main points

• The CSR cut the overall resource budget for higher education, excluding research funding, from £7.1 billion to £4.2 Billion – a 40% or £2.9 billion reduction by 2014/5

• The biggest part of the cut is to university undergraduate teaching. The Browne Review published on Tuesday 12th October is based in a cut of almost 80%. This is why fees are set to rise so much; to treble in many cases.

• BIS confirmed after the CSR that funding for undergraduate teaching would be concentrated on science, engineering, technology and maths undergraduates largely ending public funding for example for the teaching of arts, humanities and social sciences.

• Universities modelling the impact of Browne/CSR cuts predicted a loss of up to 90% of their public teaching income, meaning their fee levels will have to be between £6,500 - £8,500 just to redress the shortfall. [We are in the process of getting updated figures on the size of the likely cut in each university teaching grant for each institution].

• Most of Britain’s competitors are increasing their higher education and research budgets at the moment in order to encourage economic growth.

• Whilst the science and research budget has been protected in cash terms, over four years this amounts to a 9% cut in real terms.

• The top third of students going into the highest paid jobs will pay off their debt more quickly, pay less money and pay less of their overall income.
According to research carried out by London Economics:

1. Middle income earners and women undergraduates are expected to be hardest hit under the plans. Middle income earners will pay proportionally more of their incomes and lifetime earnings than high earners
2. The highest earners will be able to pay off their loans in their thirties while middle incomes earners would take up to another 8-14 years
3. These figures suggest that middle income earners will in effect be paying a graduate tax of 9% for 30 years whilst high earners will be able to pay off their loans at a quicker rate and have got a better deal as a result

What is our position?

We are in favour of moving to a graduate tax system in which people make a contribution to the costs of their higher education based on what they earn and can afford. We won't be able to move to that overnight and we need to look at all the issues associated with how we would develop that kind of system, but this remains our long term goal.

Lib Dem position pre-Coalition:

In a Lib Dem press release published during the election on 28 April Nick Clegg said:

“If fees rise to £7,000 a year, as many rumours suggest they would, within five years some students will be leaving university up to £44,000 in debt. That would be a disaster. If we have learnt one thing from the economic crisis, it is that you can’t build a future on debt”.