Labour must be steered by the economy in policy rethink

Source: Nate Kitch

Both parties will look for ways of strengthening the relationship between universities and the economy because one cannot thrive without the other

The polls were wrong. YouGov, ComRes, Populus, Newsnight, Ipsos Mori, even Lord Ashcroft – all told us that the general election was going to be far closer than it turned out to be. With Conservative victory, a whole host of possibilities have been consigned to the great dustbin of policy history. There will be no Institutes of Technical Education, no technical degrees and, most significantly perhaps, no cut in tuition fees. For now, finance directors and vice-chancellors can put away their spreadsheets.

In the end, it all came down to the economy. Ronald Reagan and Bill Clinton were right all along (remember the lines “Are you better off than you were four years ago?” and “It’s the economy, stupid”). People felt better off than they did five years ago and much less fearful about the future. It was the economy that mattered most to voters, and people were naive to believe that the debate had changed.

But for English universities, everything was dominated by Labour’s plan to lower fees to £6,000. Was it ill-advised? Plenty thought so. It was always likely to be better politics than policy. Designed for broad political appeal rather than as a practical way of improving higher education, the policy is redundant, although the politics may prove not to be. A majority of parents still think that £9,000 fees aren’t good value. According to YouGov – yes, them again – only 14 per cent think tuition fees offer a good deal, while almost 60 per cent think degrees aren’t worth the money. In the US, President Barack Obama and Hillary Clinton have both been looking to lower tuition fees and the costs of a college education. Many other countries such as Germany and Scotland have abolished fees altogether.

Any renewed pitch to the middle ground or to hard-working families has to include higher education. Most people know that a degree is what helps you to get on in life. So will Labour try to reduce fees again? That will depend on the politics. But even more crucial will be the economy. The current system of higher education funding will succeed or fail on that basis. Much depends on whether economic conditions will allow more graduates to work in jobs that enable them to repay their loans. The resource accounting and budgeting charge will fall by 2020 if this happens. If it doesn’t, the funding system will be in real trouble and will need radical surgery. Higher interest rates, lower repayment thresholds and other money-saving measures may be introduced before the next election. A strengthening economy also changes the demand for higher education. Recruitment is often said to be countercyclical and young people will have more choice in a stronger labour market. There could be 3 million apprenticeships on offer for a start.

Clearly, £6,000 fees ended up being the wrong policy at the wrong time. Having floated it on The Andrew Marr Show ahead of the Labour Party conference in 2011, it became a corner that Labour manoeuvred itself into (a similar thing happened with the Tories and their immigration target).

But there were other ideas. Former Labour leader Ed Miliband also launched the concept of technical degrees and technical universities. Liam Byrne, the shadow spokesman for universities and science, talked of the “broken bridge” between vocational learning and universities and between education and business. Labour advocated an “earn while you learn” option of work-based higher education. All were sensible options.

So where should Labour start when it thinks about higher education next time around? It’s probably best not to jump in with an announcement this year or even next. Instead, the party should wait to see how the current system evolves. Will pressures on the loan book subside or intensify? As lobbying increases, will the cap on tuition fees rise? Will we remain part of the European Union or even a United Kingdom? And will public finances look better in 2020? The next prime minister and chancellor may not have to worry quite as much about how to find the money to pay for new ideas.

Most importantly, Labour should wait to see if the economy really does get stronger. Higher education, like politics, is now fundamentally tied to it. Conservative politicians told us that “a strong and well-funded NHS relies on a strong and stable economy” – they may as well have adapted that to say that you can’t have strong, well-funded higher education without a strong economy (although in universities we tend to argue it the other way around). But both Labour and the Conservatives will look for ways of strengthening the relationship between universities and the economy because one can no longer thrive without the other. We will shape it, and it will shape us.

This time, the new Labour leadership should bide its time – rather than coming up with a quick line that gets carved in stone.