Lord David Willetts: The (Bleak) Future of the University?

Amidst strikes, changes in the student loan scheme and increasing student dissatisfaction, Lord David Willetts’s lecture on ‘The Future of University Education’ could hardly have been better timed. The lecture was given on 8th February as part of the Durham Castle Lecture Series, which aims to bring ‘high-profile speakers who can contribute to academic and public discussion on issues of significance’. With so many questions left unanswered by the university (need we mention the automated reply received by anyone who has complained about the strike?) the lecture gave students and lecturers the opportunity to find out how universities are funded.

Davis Willetts | © Chatham House, London
Davis Willetts | © Chatham House, London

Lord Willetts, who was the Conservative Minister for Universities and Science in 2010­­–14, is known for being behind the tuition fee increase, from around £3,000 to £9,000 per year, under the Conservative-Liberal Democrat coalition government. Despite the unpopularity of these measures among his predominantly student audience, Lord Willetts was a highly persuasive speaker. Basing the first half of his speech on the history of university education, he eloquently listed the reasons why British Universities are  under pressure. These included the cost of new technological developments, an increase in population, the sharing of its budget with government scientific research (which is, nevertheless, carried out in universities), and the lack of prioritisation given to education. By his own estimation, the government would need an extra £11 billion to make universities free to attend. With the NHS, social care and local governments facing their own urgent funding crises, injecting such a large sum into higher education is not exactly at the top of the present government’s agenda.

Although Lord Willetts belongs to a party that is traditionally less popular with students, he was keen to show his sympathy with them: he cited Marx, and criticised the elitism of Oxbridge (which is, nonetheless, his own Alma mater). He also justified his party’s removal of the cap on student intake, meaning universities in England can recruit as many students as they wish (Scotland, Wales and Northern Ireland have a different system). Lord Willetts argued that this helped redress the issue of students from poorer economic backgrounds being beaten to university places by their better-off, grammar and private school counterparts. And, backed with statistical evidence and graphs-a-plenty, he convincingly proved this: the number of students attending university from poorer backgrounds has increased by ten per cent over a ten-year period.

With his plethora of graphs, statistics, and persuasive speaking style, Lord Willetts set out to convince even the most skint student that the only way to keep universities running is to ask students to pay. He might have succeeded, were it not for a question put by one audience member: could the future not be a graduate tax? There should, of course, not be a blanket tax, as it would be unfair to ask those who have not received higher education to pay for it. But what if we taxed graduates progressively more when they earned more? It would mean that those who benefit the most from their education, by entering a well-paid job, would pay more to fund universities, while alleviating those who struggle to ascend the career ladder from the burden of the £54,000 bill accumulated after three years of studying.

The current system of applying interest to student loans also hits middle earners the hardest. Graduates who earn less than £21,000 pay only the rate of inflation ­– or the Retail Price Index (RPI) ­– as interest (which currently stands at 3.1%). Graduates earning between £21,000 and £41,000 pay RPI as interest plus an additional rate of up to three per cent, depending on income. All graduates earning over £41,000 pay an interest rate of RPI, plus three per cent. (A table outlining the different rates of interest is given on the Student Loans Company website). No further income distinctions are made, meaning graduates earning £41,000 will pay the same interest rate as graduates earning many times more. Middle-earners may eventually pay off their student loans but over a longer period of time than higher earners who can repay their loan more quickly. This means  that middle earners will accumulate more debt than higher earners because interest rates will be applied to their loan over a longer period of time. (Admittedly, Lord Willetts has advocated scrapping these interest rates, having not foreseen a rise in inflation to 3.1%.)

While it may be argued that student loans are essentially interest free since most graduates are unlikely to pay back the full amount, the idea of a graduate tax should not be dismissed. Not only would it alleviate the psychological fear of having the debt burden held over you until you are in your early fifties, it would also make better adjustments to the repayment scale so that it would depend on the graduate’s income bracket, rather than placing the burden on middle-income earners.

The suggestion from the audience member was enlightening and it had Willetts stumped. ‘Well,’ he blustered, ‘the problem with that? People in well-paid jobs would be paying a lot in tax’. There was no comeback Lord Willetts could think of, except what seemed like an instinctive defence of the rich. The revelation was as shocking as it was disillusioning, and confirmed to me that – far from aiming to improve social mobility – tuition fees are simply another way for the rich to stay rich while the poor get poorer.

Entrance to Durham Castle
Entrance to Durham Castle

The future seems even bleaker when we place Lord Willetts’s talk in the context of the current political climate. Strikes by university staff in March have highlighted how, despite students footing mammoth bills, university employees are potentially facing significant cuts to their pensions. The Guardian has estimated these cuts cost lecturers around £10,000 per annum each in pension losses. Meanwhile, students are short-changed: we are still paying £9,000 for an education which, during the strikes, we did not receive. For any arts students whose dissertation meetings were affected by the strike, every lost meeting cost you approximately £500. Maintenance grants are being heavily cut, resulting in an increase in barriers for those wishing to go to university from low income households.

In addition, the interest rate stands at 6.1% for those who took out loans with student finance, which means students would have saved money  by going to their own banks and taking out a private loan (to put this in perspective, the bank Santander charges 3.4% interest on loans over £20,000). Furthermore, with the recent revelations about government PFIs (Private Finance Initiatives like Carillion), it leaves us wondering whether the sale of student debt last February to private investors might not be the ‘value for money’ the government has, somewhat mind-bogglingly, termed it.

Lord Willetts was not, however, unsympathetic to many other issues affecting students. He highlighted ongoing issues, such as women entering STEM subjects (only 25% of girls who get an A* in physics at GCSE will do it for A-Level) and a harshening of regulations making it difficult for British students to study abroad. He also had some respectable ideas on creating an integrated baccalaureate/ A level system. This would allow students to study a broader range of subjects compared with the three or four they currently study at A-level. They could therefore make better informed choices about what subject to study at university. Yet the government has made little progress on these matters simply because there is not the funding available to run any initiatives that could change these issues.

As chair of the social-mobility focused think-tank the Resolution Foundation, you would think that Lord Willetts would be advocating a graduate tax that places the largest burden for student loans repayments on the highest earning graduates, yet his loan system has unwittingly left middle-earners and those from low income households in an increasingly precarious financial situation. With students now paying over £9,000 per year to go to university, questions are being raised over why  this amount will not cover any new initiatives – or even lecturer’s pensions. Leaving Lord Willetts’s lecture, it was hard to feel much optimism about the future of British universities. At least we can console ourselves with the comforting knowledge that at least the rich will not be taxed too much.