Tag Archives: Clegg

Student Guest Post: University, a window of opportunity for all?

This month’s student Guest Post comes from Horatio Georgestone, a First Year Politics and International Relations Student at Aston University.

University, a window of opportunity for all?

by Horatio Georgestone, Aston University

What will be the benefit of University? The answer to that question is not immediately obvious to all potential university students. Yet, the answer to this question will shape their decision to attend university. The truth is that the destination of past leavers does not reliably inform us of what will be the case for future leavers.  Projections require us to make assumptions about a highly competitive job market which is still reeling from the effects of the financial crisis.

The bigger question seems to be, to what extent is the government responsible for subsidising fees and ensuring wide participation at university?  After all, the skills gained from university are used in jobs which allow graduates to provide services to society as well as contribute to tax revenues.  Surely, if society is entitled to have a say in the way that public funds are spent, a significant amount would be invested in ensuring tuition fees remain low as it is in society’s interest to encourage and support undergraduates.

The government’s move to increase tuition fees is largely as a result of a review published in October by Lord Browne. The review was commissioned by the labour party to find out how the university funding system in England could be adapted to meet the rising demand for university places in a way that was sustainable for public finances.

The proposed system would allow universities to charge tuition fees of up to £9000 a year.  Universities charging above £6000 would have to show evidence of encouraging students from poorer backgrounds to attend such as bursaries, outreach programmes and summer schools. The government would continue to loan students the full tuition fee and the threshold at which graduates have to start paying back their loan would be moved from 15,000 per annum to 21,000 per annum. Graduates earning above the threshold would pay back 9% of their income each month. Graduates would be subject to a gradual interest system where the interest rate will rise from 0% for incomes of £21,000, to 3% plus inflation (RPI) for incomes above £41,000. Any unpaid debt 30 years after graduation would be cleared.

The average undergraduate degree costs about £7,000 a year to teach. In the current system just over £3,000 currently comes from students and the rest is covered by the government; through the means of teaching grants in particular. The Universities Minister, David Willetts, has already suggested that the teaching grant for humanities will be withdrawn. Vice-chancellors say they would need to raise fees to around £7,000 to cover the shortfall.

The coalition would have us believe that the fiscal deficit forced their hand in this decision. However, we know that what the government must cut and how rapidly they cut are normative issues. Many argue that the raised tuition fees have little to do with fiscal deficit and much to do with ideology. It is seen as a cynical attempt by the government to neglect its responsibility to subsidise education, and ensure wide participation in university in order to preserve small government.

The Liberal Democrats who have come under fire for abandoning their pre-election pledges seem to suggest that being in a coalition means compromise and necessarily the non-fulfilment of some manifesto promises. In any case, the LibDems don’t seem to think the proposal is a bad idea. Vince Cable has gone as far as to say “I think a lot of the people who are protesting actually don’t understand what’s being proposed”.  As if to say in a mildly condescending manner if students understood what was actually happening they would not protest, they would thank the government.

No-one condones the violent and dangerous actions of the 200 extremists that rioted on the 10th November, but why did media outlets choose to ignore the 50,000 who protested peacefully? Editors have the ability to set the agenda and prioritise stories. Media outlets chose to sensationalise the actions of a few, rather than accurately representing the fears and concerns that the 50,000 protested to convey.

Nobody knows for certain what the implications of the raised tuition fees will be.  There is a fear that students from poorer backgrounds will be deterred from university as the perception of a greater debt will lead them to question the benefit of studying at university. A loan of £27,000 just for tuition fees seems like a bigger risk to someone from a poorer background.  Potential undergraduates must ask themselves the question, will the repayments provide an obstacle to them living the way they wish or supporting those who need them. Will it be too expensive to live away from home? Will they have the finances to support any dependents in their care (whether they have children, elderly family members or disabled family members)? Not many students will start university with the intention of being unable to pay the loan back. Financial freedom and security is important to anyone.  A lingering student loan will restrict the options of the lowest earners and may have implications on their future financial considerations. No graduate should feel trapped by their financial circumstance.

Will we see a change in the courses studied as students opt for degrees that will be more profitable financially? Not many would complain about seeing a drop in applicants who chose to study David Beckham Studies at Staffordshire University or Golf Management at Birmingham University. But should we be worried by less students reading Art, Sociology or Land Economy? Some argue that the purpose of university is increasingly being reduced to achieving the functional basics necessary to get a well paid job. Is there still value in people studying a degree because of their love for the subject? How about the notion that university is a means of people developing into well rounded individuals who are more critical, more mature?

Will graduate debt become a problem for parents? We live in a generation of KIPPERS (Kids In Parents’ Pockets Eroding Retirement Savings) and YUCK’s (Young Unwitting Costly Kid). It is ultimately parents who have to foot the bill when their children face financial difficulty. How will families on lower incomes cope? This is problem is exacerbated with multiple children. Research by Abbey Mortgages in 2009 found that almost 500,000 adults aged between 35 and 44 returned home to live with their parents. Figures from Children’s Mutual show that a third of parents are remortgaging their homes to raise money for their YUCK’s.

A mortgage for many graduates will become a distant dream. The housing market is hardly first time buyer friendly at the moment and the situation does not look to be improving any time soon. Research by the National Housing Federation suggests that millions of young people in the current climate will not be able to afford a deposit for their own home until they reach the age of 43. The situation is worst in London where it is projected that the average 21-year-old will have to wait until they are 52 to be able to afford a mortgage.

The National Housing Federation suggests that an average of £35,614 is needed as a deposit for a house. The average house cost is around £142,457. According to The Association of Graduate Recruiters, the average graduate income is currently frozen at around £25,000 a year. When lenders have to take into consideration credit situation of graduate owing in the region of £40,000 – £50,000, how many graduates will have a realistic opportunity of getting on the property ladder before 43? How long will it take to put together a deposit when in addition to living costs, graduates are paying 9% of their income every month.  Clearly if you are earning under £21,000 a year, a mortgage is even more unrealistic as the burden of an unpaid student loan taints your credit rating for 30 years.

We simply do not know how severe the implications of the rise in tuition fees will be. However, we can question the government’s true intention behind proposing an increase in tuition fees in the way that they have.  In the words of Nick Clegg: “Fairness means that no one is held back by the circumstances of their birth. Fairness demands that what counts is not the school you went to or the jobs your parents did, but your ability and your ambition. In other words, fairness means social mobility.” Not many would agree fairness or social mobility is achieved by this policy.

Housing benefit cuts: how the government is shaping the argument

It’s been an interesting time for those of us who follow welfare politics. On the one hand, we’ve seen the axing of child benefit payments for higher earners, and now further, hefty cuts to housing benefit, on top of those announced in June. On the other, the government is apparently to embrace a greater degree of universalism on pensions. In terms of Realpolitik, this isn’t much of a riddle – turnout at the last general election was highest amongst pensioners (76%), and lowest amongst the less well-off (social classes D and E had turnout of 57%) and those who rented accommodation (55%).

But there are, it seems to me, there are several interesting points to come out of this. In future pieces, I’ll write about the likely costs elsewhere to the public sector through these cuts, and the likely effect of housing policy changes upon our welfare settlement. For now, I want to focus upon how the government is trying to win the arguments for these cuts.

There’s a lively debate about when, and under what circumstances, cutting welfare payments may be popular, and what politicians can do to influence this. An assumption that permeates much academic writing on this subject is that cutting benefits is usually unpopular. There is the least resistance when there is a lower number of beneficiaries, and when they have less access to the political process (hence the relevance of lower turnout amongst poorer people).

To build public support for the measure, the government’s strategy has been pretty clear-cut: to paint a picture of housing benefit which will be deeply unattractive to the general public. This started prior to the announcement, with ubiquitous stories in the media about particular families who appeared to be getting very generous support with their rent, had no desire to become active in the labour market, and were photographed, slouching or beaming around a flat-screen television.

Latterly, in justifying the cuts, a similarly jaundiced picture has been painted. So Nick Clegg, at Prime Minister’s Questions, contrasted those who claimed Housing Benefit with those who
“go out to work, pay their taxes and play by the rules“
. This is a pretty hopeless representation of housing benefit –“the rules” dictate that people are perfectly entitled to claim housing benefit if they are on a low income, and a good many people on HB do go out to work. As the homeless charity Shelter pointed out, just 12% of housing benefit recipients are unemployed. In many of the remaining cases (i.e. excluding pensioners, parents of very young children, and the disabled), it is just that their work is insufficient to allow them enough money to live on whilst paying their rent.

Similarly, both Nick Clegg and David Cameron focused on the £400 weekly cap on housing benefit payments. In fact, this particular measure will apply to under 22,000 households, whereas some 774,000 households, according to the government’s own impact assessment, are likely to see their benefits drop as a result of reduction in rates to the 30th percentile within a Broad Rental Market Area (the area for which benefit levels are calculated).

It is perhaps no surprise that there is initial, abstract support for the government’s plans, which 57% of voters say they support. Whether the efforts to discredit the benefit and those who receive it are as successful once the full impact becomes clear remains to be seen.