I’m not clear enough on the workings of the British Parliament to know whether Blair’s 5-vote win on the second reading of his education bill means that the political fight is over, but I thought I’d have my say anyway. The core elements of the bill are a substantial increase in fees, the right of universities to charge variable “top-up fees” and the introduction of a HECS-style repayment mechanism using the tax system. Thus it’s like a combination of all the education financing changes in Australia from the late 1980s, when HECS came in, to the recent Nelson package. Not surprisingly, I like some parts of it, and dislike others.
First, I’ll respond to other CT bloggers who’ve discussed this issue. Chris primarily makes the argument that, given that money isn’t going to come from anywhere else, or on any other terms, it’s better to take what’s on offer than to refuse on the basis that the terms are bad ones. I suppose I agree with this, but it’s not a helpful basis on which to discuss policy. Assuming you don’t want the Tories back, the same argument could be used for acquiescence in whatever policy Blair chooses to propose. Chris also dismisses concerns about variable fees, and I’ll return to this.
Daniel argues on risk grounds against the repayment mechanism (borrowed from the Australian HECS scheme) and, in my view, gets the risk analysis wrong. For precisely the reasons he outlines for not using NPV rules in assessing the effects of fees, the insurance implicit in the provision that no repayment is required until/unless earnings exceed some percentage of average earnings is considerably more valuable than he suggests. Assuming the proportion is set to give a level higher than the average earnings of non-graduates, it makes education a one-way bet. If you win, by earning more than you would have expected otherwise, you pay back some of your winnings. If you lose, you pay nothing. I don’t know what the actual proportion is, so I should stress that my support for the repayment scheme depends critically on this variable – in the absence of a high threshold substantial insurance, Daniel’s analysis is correct.
The critical sticking point, though, is not the level of fees but the principle of variable fees. If this provision had been dropped, it seems clear that the rest of the package would have passed fairly easily. The claim that these are not the same variable fees that were specifically excluded in the manifesto is nonsense, and the determination with which Blair and Clarke have stuck to them shows this.
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