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Scrapping Tuition fees – inefficient and misleading

    The Labour Manifesto advocated the abolition of university tuition fees and the reintroduction of maintenance grants for university students as part of a National Education Service (NES). Arguing that the fear of debt and the lack of money result in a fall of university applications, they were seeking to implement a Northern European model.

    While this policy initiative seems very appealing for students and parents sending kids to university next year, there are several inconsistencies and challenges to consider.

    First, as Julie Tam, Assistant Director of Policy at Universities UK, argues the ‘no fee ‘policy benefits high-earners while making no difference for low-earners as repayment of loans is only triggered after the annual income reaches £21,000. As the Institute of Fiscal Studies states “the repayments from the highest-earning graduates would fall by 67% from £93,000 to £30,000 while the lowest-earning would benefit very little”. If the policy aims to help those who are disadvantaged, then it fails to address the issue properly as it benefits high earners.

    Second, the manifesto argued that increased fees resulted in a fall of university applications. It is true that the initial increase of tuition fees to £3,000 in 2006 was associated with a decline in university applications. However, according to UCAS 2017 report, the application rate of 18 year olds in England who applied for full-time higher education reached the “highest level recorded since 2006” despite the 2012 increase of fees to £9,250. Evidence also suggests that regardless of the increased cost, disadvantaged people are applying to universities at higher rates, the gap between rich and poor students has slightly narrowed. According to UCAS report cited by Julie Tam, ‘’in 2016, those from disadvantaged backgrounds were more likely, than ever before, to enter university’’.

    Third, the initiative is believed to cost approximately £8 - 11 billion annually. Labour intended to generate revenue by increasing taxes such as income and corporate tax: this would have decreased the economy’s competitiveness in Post-Brexit Britain, increased the risk of capital outflow, and - as a report by the Centre for Policy Studies has shown - it would not have generated the amount of revenues that they were claiming. Consequently, increased costs for the government and the burden on taxpayers would harm the economy and would prove to be unnecessary as the policy does not fully benefit those who need it.  

    Fourth, free goods do not exist and “free” education must be financed by taxpayers. However, not all UK citizens attend universities. Why should taxpayers that never went to university pay for those who will earn enough to pay back i.e high-earners? Most importantly, why is higher education seen as universal with financing coming from taxpayers? Individuals might choose different paths and decide not to attend universities. Unconventional teaching such as online courses and one week trainings are becoming increasingly popular. Higher education should not be state funded and although fees have increased, the state should not help those who earn enough to pay. Instead, a correct redistribution of revenues would be to finance directly school pupils that are in need, based on meritocracy and academic performance in the form of vouchers. 

    Fifth, although prior to 1998 education in England was not paid by students, it was less costly too. The participation rate in higher education hit 49% in the 2014/2015 academic year according to Department for Education report compared to approximately 20% in the 1990. Therefore, the cost for supplying a decent learning environment - books, infrastructure and academics has increased.

    And finally, if it is justified to provide “free education’’, why not provide everything important for “free”? As Eric Schuler wrote “One often hears that education is too important to leave to the whims of the market. Yet food is even more important. In spite of this, the (relatively) free market in food seems to work quite well”. Universities are worried that the switching to complete government funding might limit the number of places and expansion.

    The current system is already costly for taxpayers but scrapping tuition fees altogether will have little or no impact at all on those who need it. Britain does need skilled workforce nevertheless the initiative looked more like Labour’s attempt to attract young voters to the polls on Election Day rather than a serious initiative to create a more diversified, accessible and quality education for all. All in all, this is not the right nor the efficient way to redistribute money.

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