Wednesday, 28 September 2011

Judging the debate on Labour's £6,000 fee

On the once-bitten-twice-shy principle, this blog has policy of not linking to anything written by Tim Leunig. Here, then is a link to the THE reporting disagreements between Leunig and Labour about whether the £6,000 fee policy is progressive or not. If you want to read the CentreForum analysis itself, then I direct you to Google.

Leunig's analysis is a bit of a hatchet job - in fact it reads like a rather rushed hatchet job. For instance he reports that the winners are disproportionately old which is absurd in a cohort study - both winners and losers will be the same age. What he means is that the winners will collect their winnings late in the life course because the effect of lower fees cashes out in an earlier end to repayments, not in lower repayments. He also reports that the Government is the main gainer from the proposal (because the amount of loan written off after 30 years is, on average, less), whilst simultaneously claiming that the Government will be paying out £3,000 more per student upfront (which, if I calculated correctly yesterday, isn't true). These can't both be correct statements, and in fact since the Government's 'expenditure' is the RAB charge assessed at the time the loan is made, then any write-off at the end of 30 years isn't even a paper transaction as far as Government is concerned.

Meanwhile Gareth Thomas in the THE refers to a House of Commons study which I can't find (I think this is the appropriate link, but there's nothing there) which finds 16% savings for the lowest earners. I have no idea where these come from, so for all my scepticism about Leunig I think it is too early to call this against him. Despite the title of my post, I'm not going to reach a judgement on the debate yet - if ever.

My judgement on the policy, though, is increasingly negative. It looks as if it will reduce spending on HE (at least relative to the 2012 baseline, if not the 2011 baseline) without bringing any significant benefit to students or graduates (since debts will remain extraordinarily high if everyone is charging £6k). However that judgement is subject to change if I can substantiate this 16% saving for the poorest graduates. We'll see.

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