Lords reject appeal to discuss ‘game changing’ privitisation of universities

The House of Lords this evening rejected an amendment that called for more time to discuss the implications of the removal of the teaching grant and supported the government’s resolution to raise the fee cap to £9000. The main points made by the opponents of the government’s plans were (1) that they amounted to the abdication of the principle that universities are a public good as well as a private benefit; (2) that they were socially divisive; and (3) that the scheme will reduce the debt only in accounting terms and that the real debt will simply be passed onto the younger generation.

Here are some extracts from the debate:

Lord Triesman, introducing the amendment:

This is game changing. This afternoon’s decision will switch the concept of universities from being a public good, as they have always been in modern history … to, in essence, a private-sector market that is driven by personal-private investment. Noble Lords might like that, or they might hate it—I am in the latter camp. Some might want to advocate it, some might want to fight it, but everyone must acknowledge that, as a concept for our universities, it has never once been debated and analysed in this House… This is the strategy of replacing money from the Exchequer with money from students’ pockets. It is, straightforwardly, the undeclared privatisation of universities… Students may become customers in this system, but I tell noble Lords this: it will not give them the power to walk around switching providers as often as they feel dissatisfied—it is not that kind of supermarket. Will it attract a higher proportion of students from disadvantaged backgrounds? There are no first-class honours for getting that answer right; there is no prayer of it.

Lord Browne of Madingley:

We wanted to create a system that could evolve organically rather than by painful contractions every five years or so. Our system—I stress again that it is a system—would achieve that by putting students very firmly in control of shaping the university landscape. Their choices would become the key variables to which everything else would respond.

The Lord Bishop of Lincoln:

Surely it is for the sake of the common good that the state uses taxpayers’ money to fund higher education, because that is precisely what a progressive taxation system is designed to deliver. It is the mechanism whereby the common purse funds what is for the common good. Even John Stuart Mill in his distinctly small- government manifesto, Principles of Political Economy, asserts that education,

“is one of those things which it is admissible in principle that a government should provide for the people”.

It is a masterly understatement if ever there was one. So let us hear no more of this idea that higher education is a privatised commodity to be bought and sold on the open market.

That leads on to a further point. John Stuart Mill also said:

“In the matter of education, the intervention of government is justifiable, because the case is not one which the interest and judgment of the consumer are a sufficient security for the goodness of the commodity”.

So let us hear no more about the choices of the student determining which courses will and will not be on offer in the higher education sector. No Government can abdicate their responsibility to plan for the development of such knowledge, skills and aptitudes as will be necessary for the future well-being of the nation and its people. Students can certainly exercise influence to drive up standards by having a choice as to which courses on offer they are minded to pursue and where. But the free-market model cannot extend to them determining by their choices whether certain subjects or courses will continue to be taught at all. I may well derive some satisfaction from all students opting to study theology, but I rather think that sufficient numbers of students studying engineering, medicine, English literature, foreign languages and so on to a high standard would be a good and necessary thing, and only Governments governing can ensure that balance for the common good…

What we need to challenge in relation to this legislation is, first, the elevation of individual benefit over the claims of the common good; secondly, education as a commodity subject to the vagaries of market forces, when it is truly to be for the common good—in relation to higher education, the individual student may not always know what is best for the good of all; and, thirdly, the need for higher education to celebrate and resource the widest range of subjects if graduates are to emerge as fully rounded human beings. That was precisely why our forefathers endowed universities and, in this regard at least, their wisdom has not been eroded by the passage of time.

Baroness Sharp of Guildford:

Loans do not come for free and substantial loans will be needed to back up the payments being made to the students. The Student Loans Company is funded by the Exchequer, which in turns borrows the money that it lends to the Student Loans Company. The Student Loans Company will then sell the debt on, on the grounds that one person’s debt becomes another person’s asset. However, because so many students will never pay off their debts, the value of those loans when sold on has to be discounted. The Treasury figure for that discount is 28 per cent, but HEPI, the IFS and London Economics all think that that underestimates the repayment issues. Even if we accept the Treasury figure, the annual cost of fee loans and maintenance loans combined to the Treasury will be roughly £2.8 billion for every £10 billion tranche, so the cost to the Treasury down the line will be just about the same as is being taken out of the higher education budget—£2.9 billion. I find myself asking why we are taking that money out of the higher education budget if down the line we will need to meet that cost, which will be more or less exactly the same. The answer, of course, is that doing so conveniently takes the sum off the current account and, through the Student Loans Company, switches it into part of the capital account that is not part of the national debt. Therefore, the cost is in effect taken off the books. That is very convenient, but it will come back on to the national debt at a later point.

Lord Giddens:

In the American university system, first, there are state universities that charge fees a long way below those of private universities. Secondly, there is a credit system for degrees that means that it is far easier for students to drop in and out of university courses than is the case within the British system. In turn, that means that it is much easier for students to work their way through university. Thirdly, in many states, community colleges form a conduit for students from poorer backgrounds to get into elite universities. I have seen for myself, while teaching in California, how important that is. For better or worse, that is not the case in the relationship between further education colleges and universities in this country, although it should become so.

Finally, the top universities in America—the elite or private universities, to which reference has been made—are able to run a needs-blind admissions system because they have such massive endowments. There is no chance whatsoever that our top universities—barring maybe one or two—could ever achieve such endowments within the medium term. That system is not feasible here. I repeat, therefore, that we will get all the downside of the American system without the public benefits which that system provides. For this reason, I strongly endorse the amendment because the Government should be forced to think again. This legislation is ill thought through, corrosive and socially divisive.

Baroness Blackstone:

If the Government were to consult and do a little bit more listening and rethinking, the first thing they would do would be to restore some of the teaching grant for the arts, humanities and social sciences. That would be strongly supported by the Labour Party as something that we would have done had we won the election; we would have had to cut teaching grant but not by 80 per cent. If that were to happen, the Government could then set fees at a considerably lower level which would be more acceptable to young people. We must remember that the very high fees are to replace an 80 per cent cut in grant so that universities can continue to operate with the facilities and staff they need to meet the standards expected of them in this country and internationally.

I passionately believe that were the Government to do that, students, their families, graduates, universities and the taxpayer would, as a result, have a better outcome but the deficit would still be cut. In turn, the Government would be congratulated on listening, on thinking again and on putting forward proposals which sustain the long-term future of higher education in the UK as a public good, as it is perceived everywhere else in the world.

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