Tuition fees - sustainable funding or cultural vandalism?

MPs will vote tomorrow on legislation that will completely transform the face of higher education in the UK. With journalists promising us a day of ferocious debate in the Commons, and students set to continue their protests, we are set for a day of unpredictable drama. But amid the anger, recriminations and drip feed of half-baked concessions, there’s a real danger that we’ve collectively lost sight of what we’re actually debating here.

If passed, the legislation will complete a remarkable turnaround in the way we fund our universities. When Tony Blair came to power just 13 years ago, a university education was free for anyone with the ability, inclination – and luck – to make it into higher education. This will be the third time that politicians have increased tuition fees since then – but the current hike in fees will be by far the most significant, because it has shifted university teaching decisively towards a free market.

The most important figure in this debate isn’t the £9,000 cap on tuition fees – it is £0. That is the amount that the government will contribute towards an undergraduate degree (except for science, technology, engineering and maths subjects, which will still receive a reduced government subsidy). The significance of that fact is hard to overstate: for the majority of students, their education will not be a matter for the state. That doesn’t quite make it a free market for higher education, but it isn’t too far off.

To put that another way, the government is cutting funding for university teaching by 80%. To my knowledge, that’s the biggest cut to any significant area of spending, and it makes the eye-watering cuts to other areas of public spending (defence springs to mind) look like rounding errors. To my mind, this is what we should be debating: why should the higher education budget be cut so dramatically while Helen Mirren continues to receive her winter fuel allowance, while we build two brand new aircraft carriers.

But before getting into that, let’s make something clear – there is an uncomfortable fact about higher education that both the students and the opposition would like to ignore. Our universities need more money. Like it or not, our livelihoods increasingly depend on a global knowledge economy, in which countries like ours can only compete through skills and innovation. This has created hysteria in some parts of the media (both left and right), but it is a cold, hard fact. At the latest count, 48% of jobs in the UK were in knowledge-intensive industries, while only 30% of us have degrees. Of course, the knowledge economy isn’t the exclusive domain of graduates, but degrees certainly help. We’re slipping down the international league tables in terms of graduates, and this slide will lead us to economic stagnation unless we can improve our universities.

Given this need for extra cash, and the strain on the public finances, it was always inevitable that students would have to contribute more towards their degrees. In many ways, raising fees to provide better degrees would be a good solution – and the mechanism for paying tuition fees out of your salary that Clegg, Cable and Cameron have pinned their argument on is essentially a sound one. But there’s one slight problem – the increase in tuition fees isn’t going to go towards an improved education, but (mostly) towards covering the funding the government is taking away. The consensus seems to be that universities will have to charge around £7,000 a year just to stand still under the new arrangements. This is all very well for the top institutions - although Oxford and Cambridge already face a shortfall of £8,000 per undergraduate, which they make up out of donations. But less glamorous institutions may not be able to attract students at £7,000 a year, which would mean fewer graduates and bad news for the economy.

So why is all the attention on the fees, and not the disproportionate cuts in government support for universities? There is (it seems) an unspoken consensus among political parties that taxpayers shouldn’t subsidise students through an education that will ultimately increase their salary. That this simplistic argument has become widely accepted is a fatal – and stupid – mistake.

First, look at a plain numbers argument. We have a progressive taxation system - so if graduates go on to earn higher salaries, they pay more in taxes, not just in absolute terms but as a proportion of their income. An investment in higher education now should pay off in ordinary tax returns later.

Second, an economic argument. Without enough graduates, our economy will struggle to grow. That doesn’t just affect potential graduates – it affects everyone, because jobs in high-tech industries generate jobs and economic activity for everyone else.

Third, a cultural and moral argument. An educated population is healthier, more resistant to political tyranny, and creates better collective cultural outcomes. Society as a whole benefits from sending people to university. That means that there is a case for subsidising university education – not the whole amount, but part of it – even after setting aside all financial and economic arguments.

How on earth could an advanced society have forgotten such basic principles? How could a legion of politicians, all of whom benefited from a free university education, be guilty of such a collective abdication of responsibility? And among all the talk of broken promises, does this amount to a betrayal of a whole generation of young people? I doubt very much that tomorrow’s debate will shed any light on this.