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Nik Darlington: When it comes to student finance, Liberal Democrat MPs must vote with their heads, not with their hearts

Picture 21 Nik Darlington trained as a strategy and marketing consultant with Simon-Kucher & Partners in London, specialising in higher education strategy and pricing.  He is now working as a parliamentary adviser in Westminster and undertaking postgraduate studies at King's College London.

The Independent Review of Higher Education and Student Finance was launched by Lord Mandelson less than one year ago, on 9th November 2009.  Yet on its day of long-awaited publication, we are already quite well aware of the chief recommendations, including the abolition of the tuition fees cap (with Government support ceasing beyond £7,000) and changes to student loans, such as the rate of interest and the repayment threshold.

Consequently, the chief concern now is how the Government reacts to it and how Liberal Democrat MPs react to the Government.  In an e-mail to Government MPs over the weekend (“Dear Friend” if Lib-Dem, “Dear Colleague” if Tory), Vince Cable stated, “the Government will respond shortly.”  I suspect this means that it will be integrated with the Comprehensive Spending Review next week, thus cooling the fires somewhat, or at least fanning them amidst several more sizeable infernos such as benefits cuts and the Strategic Defence Review.

Financial aid is fundamental to any settlement.  Universities must channel a significant proportion of the extra revenue accrued into scholarships and bursaries so as not to turn students away based on (in)ability-to-pay.  I put this and the second point, about a National Bursary Scheme, to Aaron Porter, the NUS President, at last week’s party conference.  He agreed that fears about higher fees ought to be unfounded if there is a proper system of financial aid in place, one that is easily accessible, well communicated and adequately funded.  This should apply at all levels, whether undergraduate, postgraduate or part-time.

Reform of financial support is a core objective of Lord Browne’s review, alongside the more emotive topic of fees.  The introduction of higher fees in 2006 has not reduced overall demand nor has it curtailed the continuous rise in participation of young people from less affluent backgrounds.  What can hold people back is a lack of awareness about the financial support available, much of which goes unclaimed.  Get sound provisions in place to deal with this and it will go some way to making an increase in tuition fees fairer and more palatable its detractors.

The graduate tax, mercifully, has been kicked into the long grass by Vince Cable.  In his e-mail to MPs he wrote that it “fails both the tests of fairness and deficit reduction”, something that I referred to when he announced it in July.  Aaron Porter also seemed to be playing down the graduate tax in a Today programme interview last week.  Its huge flaws have been well documented and whilst media volume might be high, its outlets of support have become few and far between. Except for one notable advocate – Ed Miliband.

His positioning of the Labour Party under his leadership as pro-graduate tax is tactically astute and suggests that he, like me, sees higher education policy as a massive – and possibly terminal – fissure in the coalition.  Another sign of Miliband’s tactical strength is the appointment of Alan Johnson as Shadow Chancellor.  This has gagged Labour’s most vocal opponent to the graduate tax and the man who, as higher education minister, guided the original tuition fees bill through Parliament.  Tim Montgomerie has written several times (here in The Times (£) for example) that Ed Miliband should not be underestimated and on this evidence, rightly so.  He is proving a shrewd operator.

Labour’s position is fascinating and is just as much of a U-turn as it would be for the Liberal Democrats not to oppose an increase.  However, Ed Miliband was not a MP when the legislation passed and nor were many of his parliamentary party.  I cannot envisage a single Labour MP going against a newly elected leader on an issue over which 71 Labour MPs rebelled in 2004.  As the Independent reports, the Government is far from sure of winning a Commons vote.  MPs from the SNP, Plaid Cymru, the SDLP and Green leader Caroline Lucas, all signed the pre-election pledge too.  Even four Conservative MPs signed it, Lee Scott (Ilford North), Bob Blackman (Harrow East), Stephen Mosley (City of Chester) and Ben Wallace (Wyre and Preston North), although the latter has since backtracked on it.

This is the coalition’s first big test, as I suggested in the latest Bow Group journal and as William Cullerne Bown wrote on ConservativeHome at the weekend.

The crucial factor for me is whether the Government can convince Liberal Democrat MPs that the “progressive graduate contribution” – taken to be variable interest rates for loan repayments – is enough to make them abstain in any vote.  This is the political key to success for the Government.  A deal between the two sides hinges on these tiered interest rates in which most graduates are charged a market rate but graduates on lower salaries receive a lower, subsidised rate.  The £15,000 repayment threshold would also be increased.

In order to win over nervous Liberal Democrat MPs, the Government has to make this point very, very clear.  This policy, like a graduate tax, achieves the progressive objective of making the rich pay more for their education than the poor.  Yet it avoids the myriad of problems associated with a pure graduate tax, such as recoverability of payments, losing the direct institutional link and the unfair proposition of some graduates paying back more than the cost of their degree.

Our universities need extra funding and they are not going to get it from the taxpayer.  Liberal Democrats like Nick Clegg and Vince Cable understand this fact and they realise that the idealistic pledges of Opposition cannot translate perfectly into sensible Government.  Some Liberal Democrat MPs, such as Greg Mulholland and Sir Menzies Campbell, have indicated that they will vote against any fee increase regardless.  Yet even Stephen Williams, that party’s universities spokesperson before the election, was ambiguous on the Today programme yesterday about how he and his colleagues ought to react.  The deal remains on the table and since the coalition’s formation, Liberal Democrat MPs have shown commendable pragmatism in acting in the national interest.  They must continue to do so now.

The NUS might never forgive them for reneging on their pre-election pledges but neither might the country if their impractical opposition emasculates our universities or drives them towards privatisation.


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