The augar report on university funding offers carrots and sticks. It deserves scrutiny — but is it fair? | thearticle

Millions of undergraduates are sitting their finals this week. For them, this will be the most stressful experience of their lives so far. Most can’t wait to celebrate and relax, before

heading off. The last thing they want to be told is that they will still be paying for the privilege of three years of academic life for the next forty, well into their sixties. Yet this is

the sobering message of Philip Augar’s report into university funding, published today. Like many such proposals, it has a carrot and a stick. The carrot is a cut of £1,750 in tuition fees,

plus the reintroduction of maintenance grants for poorer students and a reduction in the interest charged on loans from 6.3 per cent to the level of inflation. These measures are estimated

to cost the taxpayer a hefty £6 billion a year. They are supposed to make degrees more affordable not only for students but also for parents, most of whom are expected to contribute £15,000

over three years. There are several sticks, however. The first is that graduates will go on repaying their loans for 40 years, rather than the present 30, before the residue is written off.

The prospect of lifelong debt may deter some from embarking on a degree, even though the spread of graduate-only professions means that school-leavers who might have gone into nursing or the

police, say, will find themselves excluded. The second stick is that the cut in interest rates applies only while students are studying. Thereafter, the rates will rise again and the laws

of compound interest mean that many graduates will end up paying more. Thirdly, universities will have to take a big cut in their funding. Most are likely to reduce the quantity or quality

of teaching at a time when there is already widespread dissatisfaction with both. Much-needed but expensive improvements in pastoral care, to address the mental health crisis in the student

population, may go by the board. Inevitably, the Oppositon parties will focus on the sticks rather than the carrots. The Labour Party, which introduced the present system of tuition fees and

loans under Tony Blair, has proposed to abolish them. True to form, Jeremy Corbyn has been vague about how he proposes to fund universities instead. The Liberal Democrats were badly burned

once by the tuition fee issue and will be shy of any proposal that has losers as well as winners. It is safe to assume that a hung Parliament will struggle to address such a toxic issue. So

the auguries for the Augar report are not good. Even so, Theresa May was not wrong to ask a hard-headed banker to take another look at the way we pay for institutions which are now attended

by roughly half of our children. No other country pays for universities as we do. In the United States, student loans are privatised and the repayment rate is nearly 100 per cent. Here, the

taxpayer is likely to pick up nearly half the tab. Of course, once graduates enter the workforce, they become taxpayers too. The present system spreads the cost of higher education among

those who benefit and those who do not, though it is less inequitable than Labour’s policy of making the state shoulder the whole burden. That, however, is still the system in most of

Europe. It is no accident that the best British and American universities outperform their European counterparts by almost every measure. The more independent of the state universities are,

the better funded and more competitive they are. Britain is different for one rarely noticed reason: our undergraduates usually “go away to uni”. In most other countries, that is not so: the

vast majority study locally and live at home while doing so. This cuts costs for families, but makes the university experience less of a rite of passage. British students are expected to

cope with living away from home, usually for the first time, as well as mastering independent study. Studying away from home may contribute to the high rate of mental health issues, but it

has advantages too. University towns here are mobile communities with young populations where a rich and diverse culture often flourishes — unlike their more static counterparts abroad.

Another point to bear in mind is that we are already highly taxed. Today is “Tax Freedom Day”, the date on which we stop working for the state and start earning money for ourselves. That

date has been creeping forwards since 1995, with health and welfare absorbing a steadily rising share of GDP. One of the costs that has been shifted from the state onto the individual has

been higher education. To make the taxpayer fund universities again would be a retrograde step. The Augar report deserves to be subjected to long and rigorous scrutiny. We should beware of

any increase in the size and power of the leviathan state. But the status quo is far from perfect: witness the over-generous salaries that university bureaucrats pay themselves. The test for

reforms such that proposed by Philip Augar should be one of fairness. Is it fair to universities? Is it fair to students? And is it fair to the taxpayer?