Monday 21 September 2009

A social democratic case for higher tuition fees?

The debate over university tuition fees is back.

At the Lib Dem conference, Nick Clegg has been pressed onto the defensive over his proposal to postpone the Lib Dem policy of scrapping existing tuition fees (which would cost some £12.5 bn over a 5-year parliament). Meanwhile, the CBI has come out with a plan to let universities raise their fees to £5,000 per year. NUS President, Wes Streeting, comments that the CBI proposal is 'offensive'. University Vice-Chancellors quite like it.

There is, I think, a clear social justice case for tuition fees - and for raising them. The case is not conclusive. There are reasonable objections to it. But a case is there, and critics on the left - whether in Labour, the Lib Dems, or the Greens - need to address it.

The case I have in mind is this. Whether we are concerned with justice between age-groups, or justice between young adults, we could probably do a better job of promoting social justice if we spent some of the money we spend on higher education subsidies on something else. Given a fixed budget, we should therefore spend money on other things and raise tuition fees accordingly.

First take spending between age groups. Would we promote social justice more effectively if we redistributed some spending from one age group to another?

Well, we know that earlier interventions to develop human capital are more effective than later interventions. Yet we spend much more per head on university students than we do on education in children's early years. So it looks as if there could be a discrepancy between how we currently spend money in education and how we would spend it if we were seeking to provide maximum benefit to the disadvantaged (in terms of cognitive development and subsequent life-chances). If so, then there is apparently a case for shifting spending down the age-range, from higher education to earlier years.

Of course, we don't necessarily have to cut higher education subsidies to devote more money to early years education. We could cut something else. The Lib Dems propose that we cut the Child Trust Fund.

But this brings us to our second issue of justice: What would an equitable public policy to support young adults look like?

As a social democrat, I think that young people should have an equal platform from which to launch ambitiously into their adult lives. The obvious way to achieve this is to give them all equal resources to explore and pursue their initial ambitions. This is the thought behind the idea of a citizens' inheritance: granting all citizens on maturity a sum of capital that is theirs to do with as they like.

Higher education subsidies do provide a citizens' inheritance in kind - but only for some young adults. They provide hefty citizens' inheritances for the more academically able who, in addition, tend to come from more advantaged socioeconomic backgrounds.

Meanwhile, those young people not going to higher education tend not to get an equivalent public subsidy, and so tend not to get an equivalent platform for launching ambitiously into adult life.

Thus, as a matter of justice in the distribution of public spending on young people, we have reason to consider shifting public money out of higher education subsidies and towards a more universal capital grant scheme.

This, again, would imply higher tuition fees for those going into higher education. The flip-side would be something like a higher Child Trust Fund or similar policy (one that would put some capital into the hands of today's 18 year-olds).

As I said, I don't think the case is conclusive. But I think it is a strong case. It should inform the emerging debate over where the burdens of a 'progressive austerity' should fall.

Postscript, 23/9/09: In view of the excellent comments by Timothy Carter and others below I thought I should at least add a question-mark to the title of this post. The argument I make is an argument for reducing higher education subsidies. Whether that is best managed via higher tuition fees or higher taxes on graduates is another question....


Tim said...

Thanks for this. You're right - there is a very interesting (and provocative) social democratic case to be made here. But I wonder: wouldn't the better thing to do be to effectively remove the public subsidy for the already well-off through the institution of a graduate tax?

I remember Bill Rammell once arguing the case for tuition fees, saying that they were effectively a graduate tax (because loans to pay for them are not re-payable until you're earning £15k+).

But if that IS the case to make in their favour, then why not remove all the extra costs of administering the student loans company etc. and have a grad tax?

donpaskini said...

Hi Stuart,

Isn't this line of analysis applicable to almost any policy area?

Take the alleviation of child poverty. Would we promote social justice more effectively if we redistributed spending in order to guarantee all people access to primary education, water and food? Probably, yes. So in order to ensure maximum benefit to the disadvantaged, there is apparently a case for, say, scrapping child benefit and child tax credits and spending the money on international aid.

After all, what would an equitable policy to relieve poverty look like? A social democrat would argue that it would be to ensure that everyone has an adequate income. At the moment, our public spending does offer some support to help people achieve an adequate income, but only if they are British and only if they have children. Would we do more to alleviate child poverty if we redistributed some spending from British mothers to those living in developing countries? The answer is probably yes, given that we spend so much more per head on relieving child poverty in the UK compared to the rest of the world.

Thus, as a matter of justice in the distribution of spending to alleviate poverty and ensure income adequacy, we have reason to consider shifting public money out of welfare spending, and towards a more universal basic income scheme.

That's how the provocative social justice case for abolishing child benefit and child tax credit goes.

Stuart White said...

Timothy: the graduate tax would address one aspect of the inequity between those going through HE and those not - it would claw back the extra spending the former receive. For that reason, among others, I think its a good proposal.

However, those getting HE, free at the point of use, would still get a platform for launching into adult life which those outside of HE lack. To address this aspect of the inequity, we need something more like the universal capital grant scheme.

Don: no, you can't make the same argument for every policy. Some policies give you a bigger 'bang for the buck' with respect to a given social justice objective, and those policies are preferable on social justice grounds - they won't be vulnerable to the criticism.

The specific example you give concerning child tax credits only works because you assume that the social justice objective is alleviation of global poverty rather than domestic poverty. Rightly or wrongly, the policy objective is usually understood in domestic terms, and, so understood, your case against child tax credits would be much less plausible.

If we drop the usual assumption that we are talking about domestic povery reduction, and, as you imagine, make relief of global poverty the policy objective, then all bets are off. Obviously, then huge swathes of what we currently do would come into question.

But, to return to your main point, even in this scenario, it would still be true that some policies are better at achieving the policy objective, and these policies wouldn't be vulnerable to the kind of criticism I here make of higher education subsidies.

Stuart White said...

Don: further to my earlier comment - yes, you can make similar arguments in any and every 'policy area', but not with respect to any and every policy in a given 'policy area'.

Unknown said...

The trouble is that you seem to be taking as a given that higher tuition fees is the only way to reduce the subsidy and therefore to free up money for early years education.

But that makes no sense - surely you have to assess other options like a different form of HE funding (eg a graduate contribution); just cutting the spend on HE rather than increasing the student charge; cutting other govt expenditure; or raising money through other taxation.

Any of those things could potentially produce a better social democratic outcome, surely?

Stuart White said...

Nick: yes, there are lots of other variables. If, for example, we were prepared to pay the taxes, we could have high levels of spending on early years education and a system of capital support for young adults that would be so generous as to make higher education effectively free for anyone who wanted it (they would use their capital on HE). My thought experiment is premised on the assumption that this isn't feasible, and that we have to proritize within an overall budget that is smaller than we (social democrats) might like.

And, yes, even if we didn't raise taxes, we could achieve the spending on education I've just imagined by cutting spending on other things (defence, transport, etc.) Again, my thought experiment is premised on the assumption that big cuts in other areas either aren't feasible or desirable (or both).

The thought-experiment is really a way of trying to identify what the most important things are for us to spend money on in a situation where we can't spend on everything we might like.

Stuart White said...

Nick: I missed your specific point about graduate contribution/tax. On that, see my reply to Timothy. You and Timothy are quite right that, at the end of the day, its not tuition fees per se that my argument supports, but a reduction in higher education subsidy - and, for all I know, that might be better accomplished through a graduate tax.

F Kidd said...

I want to study for an MSc Finance, would the proposed increase in tuition fees be applied across the board, to both graduate and undergraduate courses?