What is the right way to fund our universities? It is appropriate to pay for healthcare and school education out of general taxation because everyone is entitled to benefit from them. But not everyone is entitled to go to university, only those who have reached a certain educational standard and can thus show that they have the potential to benefit from higher education. The country needs plumbers but plumbers do not need degrees, so why should plumbers pay for the cost of other people's degrees?
In the second half of the 20th century, the generally agreed answer to this question was that society also needs doctors, scientists, lawyers and teachers. These professionals need degrees in order to achieve competence, so society should pay for their higher education. The expansion of universities in the 1960s also turned higher education into an engine of social mobility, broadening the pool of potential doctors, lawyers and teachers, providing access into the professions for young men and women from families who had never had such opportunities before. Since participation rates remained relatively low, the full cost could be borne by the exchequer without it really being noticed that the education of future high earners was being paid for by the non-graduate masses.
Students demonstrate in November 2010 against the rise in fees
But the proportion of young people going into higher education has risen at an astonishing rate, especially among women. In the early 1960s only about five per cent of the population went to university. Even when Oxford graduate Margaret Thatcher came to power, only ten per cent of women were benefiting from higher education. By the time John Major turned the polytechnics into universities, that figure had doubled. In the academic year 2008-09, 51 per cent of female school leavers entered higher education, up from 49 per cent the previous year. The overall figure also showed an all-time high, with 45 per cent going to university, including 40 per cent of young men. A system originally designed for a small elite was now serving half the nation, at huge cost. It was against this background that in November 2009 — as the university admission service was reporting a further surge of applicants to yet another high for the following year — former BP chief executive Lord Browne of Madingley was commissioned by the Labour government to lead an independent review of the future of higher education funding.
History was repeating itself. The first public sign that the Major administration knew that it would be defeated and the Blair circle knew that they would be victors in 1997 was the cross-party agreement in May 1996 to leave the future of higher education funding to the Dearing Report, which would be published after the election, thus taking the toxic question of student fees out of the political arena. Dearing recommended the introduction of "a flat rate contribution of around 25 per cent of the average cost of higher education tuition" — flat rate because he wanted to avoid a higher charge for the most expensive but most essential subjects, such as medicine and biological sciences. A "top-up" fee, as it came to be known, of £1,000 per student per year, paid up front, was accordingly introduced in 1998. That amount was, however, far below Dearing's recommended one quarter of the real cost of educating an undergraduate. The meagre top-up was insufficient to fill the black hole in university finances and to sustain a mass higher-education system.
The second Blair administration went back on an election pledge (by way of a sleight of hand involving date of implementation) and greatly increased the fee, sweetening the pill by removing the obligation to pay up front and introducing instead a system of loans that students would only have to repay once they had graduated and started earning £15,000 per year. The original ambition was to raise the fee cap to £5,000 in the hope that this would produce an element of market choice: a research-intensive university might charge the full whack while a college focusing on much less expensive humanities teaching might attract more students by charging only half as much. But, as so often in Blair's second term, he buckled under political pressure and the cap was set at £3,000, which has increased very modestly with inflation to its current level of £3,290.
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