THE BLOG
19/02/2018 17:21 GMT | Updated 19/02/2018 17:21 GMT

Is Theresa May Planning To Redistribute From Poorer Students To Rich Students?

May's prospective reforms could be even more of a disaster than the status quo

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So the government is finally reviewing England’s exorbitantly high tuition fees. This could lead to tuition fees being cut for the first time since their introduction in September 1998, and on the surface this is great news but a closer look suggests prospective reforms could be even more of a disaster than the status quo.

The most common source of funding being proposed to reduce tuition fees is by pushing universities into slashing or scrapping student bursaries and other funds intended to promote working class attendance. These cuts would presumably free up money from universities own coffers to cut fees.

The crucial problem is that this approach is based at its core on robbing working class students to fund tax breaks for the better off. Scrapping (or reducing) bursaries, which are already pretty inadequate, to pay for a discount for the rest is redistributive - the problem is that it’s redistributing funding from those on lower incomes to middle class and upper middle class students.

Reducing fees to within the region of £6000 is least likely to benefit students who go on to earn median or below the median incomes, it is most likely to benefit that wealthiest 17% of graduates who go on to pay off all of their student debt. Those who earn less after graduating would incrementally benefit less and less from a reduction of fees of this size, with students who go on to earn average or below-average incomes very unlikely to benefit at all. Money Saving Expert’s Martin Lewis is claiming that outside that first 17% it is only the next 10-20% highest earning graduates who would benefit at all from reduced fees, as the remainder of graduates would simply have the rest of their debts wiped off. To top this off, though the current system favours those who go on to make relatively little money, it also appears to disproportionately benefit the richest tenth of earners.

This approach is based at its core on robbing working class students to fund tax breaks for the better off

If the government’s review goes down this route it will in effect force working class students to pay for a tax break for a privileged minority. This is no good when we need a serious reflection and debate on how society pays for education.

This ill-conceived, upper-middle class partisanship is a crude reaction to last summer’s supposed ‘Youthquake’. But it is also a quick fix presumably intended to cut headline fees, get some good press and allay the concerns of parents and students.

Some on the right will point out that this only confirms that scrapping fees altogether would disproportionately benefit the more well off, and while this is true, Labour have repeatedly made clear that it will be big business or the wealthiest 5% of taxpayers who pay for these changes. The Labour Party’s proposed alternative would categorically be an act of wealth redistribution that simultaneously restores the principle of free, universal education.

What is missing from the debate is that many policymakers are neglecting the fact tuition fees are effectively repaid as a graduate tax, albeit as a flat graduate tax where everyone is paying the same rate. So the problem isn’t so much that fees are bad because they are high, but that fees are a regressive tax which entrench the idea that one generation of students ought to pay for something which most people think should be free.

This gets to the heart of who higher education should be for, who is most welcome and who is least welcome in the sector. When these proposals come not long after the wholesale scrapping of student grants, a reform which Justine Greening opposed but failed to do anything about, it’s clear what sort of people the system is for.

So here’s an idea, if you want to cut fees (rather than axe them altogether) you could at least start by reviewing the generous tax breaks going to private schools or taking a look at Britain’s oddly low levels of corporation tax. But of course that’s wishful thinking for a government which has nothing to offer beyond immiseration for the many and riches for the few.