Peter Ainsworth is Managing Director of CAMROW and the author of Setting Universities Free, How to deliver a sustainable student funding system.
Andy Burnham took office with public debt approaching 100 per cent of GDP, gilt yields touching levels not seen since the 2008 financial crisis, and the tax burden at its heaviest in peacetime.
He said he wanted a “circuit breaker” for Britain and to reverse Thatcherism. His response has been a £2 bus fare cap, a VAT cut on electricity, and a ban on fake discounts – trivial measures given the magnitude of the challenges facing UK Plc. If this is reversing Thatcherism, he has not understood how radical Thatcher actually was.
By comparison, the party of Thatcher has Neil O’Brien, Shadow Minister for Policy Renewal and Development, free to use the luxury of opposition to push the Overton window.
His contribution?
A recent Substack post concluding that “we could easily be losing over £2 billion a year on loans which we should not be making” — loans to UK residents who have secured settled status under the EU Withdrawal Agreement.
His policy proposal? Stop issuing loss-making loans? No. Nothing so radical.
Instead, he concluded that the state should still make loss-making loans, but to slightly fewer people, by cajoling the Home Office into using its discretion when awarding settled status less generously, when the courts have already struck down one related attempt. That is not moving the Overton window; it’s window dressing, every bit as timid as Labour’s little measures.
O’Brien’s proposal arrives alongside a damaging verdict on the scandal that is the current student loan system. The Treasury Select Committee concluded that student loans were, in part, mis-sold — to home students as well as those with settled status. Government has spent a decade designing, marketing, financing and rewriting the terms of this product, badly enough that its own select committee condemns the way it was promoted and managed.
Not only did the loan misrepresent its costs, the educational service it buys promised more than it delivered.
This June the IFS sharply revised down its estimate of graduates’ lifetime earnings gain — for men from £168,000 to £109,000, for women from £126,000 to £90,000. A quarter of graduates are now expected to be worse off financially for having gone to university. The government accepts that at least 30 per cent of all student lending will not be recovered, an £8-9 billion write-off each year. Some, as O’Brien observed, is from settled-status students, but the remainder is home students, and it is too early to know the relative shares.
It appears that O’Brien is trying to jump on the immigration bandwagon.
That issue is current; on Monday 10th August, 230 migrants illegally crossed the Channel in a single inflatable boat, a new record. Asylum seekers on small boats generally come from countries with little cultural connection to Britain. That is the immigration story the public is actually anxious about. But O’Brien has instead taken aim at people with settled status: here lawfully, under a treaty right, disproportionately European.
Romanians in particular draw his ire, an odd choice of target. Romania is a Christian country, with a small-c conservative culture built on family and hard work that sits comfortably alongside British norms of law and decency. Not only has he focussed on the wrong sort of immigrant; his case against them does not stand up to examination either. A key accusation is that non-nationals’ repayment rate is below that of home students, but that rate takes no account of how much is being repaid and is skewed by the proportion of the relevant population who graduated long ago versus recently. Wrong target, weak evidence.
The economic aspect of his argument is no better aimed. O’Brien complained about “losing over £2 billion a year on loans which we should not be making,” when the actual total loss on student loans is £8bn to £9bn a year. Why should the taxpayer bear any of that cost when universities are delivering such poor outcomes? The state has no business underwriting a degree it did not design, does not deliver, and does not know the worth of. That is the question a Thatcherite would have asked. Not which foreign nationals should be denied a loan, but why the state is issuing the loan at all, to anybody.
Let universities set their own fees and finance the degrees they sell, retaining real exposure to whether the loan is repaid. This is not theoretical: StepEx already administers FCA-regulated loans for Buckingham, the University of Law, Cranfield, and OPM-delivered courses at King’s, Cambridge and LSE, with the university carrying the risk and free to sell the cashflows on. Such a loan can be pursued wherever the graduate lives, solving O’Brien’s collection problem without touching a single settled-status right, and applies the same discipline to the British student on a low-value course as to the Romanian STEM student. FCA regulation makes mis-selling harder; universities carrying the risk gives them a stake in whether graduates find work. Both problems are solved by the same structural change.
Westminster does not lack for small ideas. It lacks a party willing to put forward policies of sufficient structural ambition to match the scale of the challenges the country faces.
Peter Ainsworth is Managing Director of CAMROW and the author of Setting Universities Free, How to deliver a sustainable student funding system.
Andy Burnham took office with public debt approaching 100 per cent of GDP, gilt yields touching levels not seen since the 2008 financial crisis, and the tax burden at its heaviest in peacetime.
He said he wanted a “circuit breaker” for Britain and to reverse Thatcherism. His response has been a £2 bus fare cap, a VAT cut on electricity, and a ban on fake discounts – trivial measures given the magnitude of the challenges facing UK Plc. If this is reversing Thatcherism, he has not understood how radical Thatcher actually was.
By comparison, the party of Thatcher has Neil O’Brien, Shadow Minister for Policy Renewal and Development, free to use the luxury of opposition to push the Overton window.
His contribution?
A recent Substack post concluding that “we could easily be losing over £2 billion a year on loans which we should not be making” — loans to UK residents who have secured settled status under the EU Withdrawal Agreement.
His policy proposal? Stop issuing loss-making loans? No. Nothing so radical.
Instead, he concluded that the state should still make loss-making loans, but to slightly fewer people, by cajoling the Home Office into using its discretion when awarding settled status less generously, when the courts have already struck down one related attempt. That is not moving the Overton window; it’s window dressing, every bit as timid as Labour’s little measures.
O’Brien’s proposal arrives alongside a damaging verdict on the scandal that is the current student loan system. The Treasury Select Committee concluded that student loans were, in part, mis-sold — to home students as well as those with settled status. Government has spent a decade designing, marketing, financing and rewriting the terms of this product, badly enough that its own select committee condemns the way it was promoted and managed.
Not only did the loan misrepresent its costs, the educational service it buys promised more than it delivered.
This June the IFS sharply revised down its estimate of graduates’ lifetime earnings gain — for men from £168,000 to £109,000, for women from £126,000 to £90,000. A quarter of graduates are now expected to be worse off financially for having gone to university. The government accepts that at least 30 per cent of all student lending will not be recovered, an £8-9 billion write-off each year. Some, as O’Brien observed, is from settled-status students, but the remainder is home students, and it is too early to know the relative shares.
It appears that O’Brien is trying to jump on the immigration bandwagon.
That issue is current; on Monday 10th August, 230 migrants illegally crossed the Channel in a single inflatable boat, a new record. Asylum seekers on small boats generally come from countries with little cultural connection to Britain. That is the immigration story the public is actually anxious about. But O’Brien has instead taken aim at people with settled status: here lawfully, under a treaty right, disproportionately European.
Romanians in particular draw his ire, an odd choice of target. Romania is a Christian country, with a small-c conservative culture built on family and hard work that sits comfortably alongside British norms of law and decency. Not only has he focussed on the wrong sort of immigrant; his case against them does not stand up to examination either. A key accusation is that non-nationals’ repayment rate is below that of home students, but that rate takes no account of how much is being repaid and is skewed by the proportion of the relevant population who graduated long ago versus recently. Wrong target, weak evidence.
The economic aspect of his argument is no better aimed. O’Brien complained about “losing over £2 billion a year on loans which we should not be making,” when the actual total loss on student loans is £8bn to £9bn a year. Why should the taxpayer bear any of that cost when universities are delivering such poor outcomes? The state has no business underwriting a degree it did not design, does not deliver, and does not know the worth of. That is the question a Thatcherite would have asked. Not which foreign nationals should be denied a loan, but why the state is issuing the loan at all, to anybody.
Let universities set their own fees and finance the degrees they sell, retaining real exposure to whether the loan is repaid. This is not theoretical: StepEx already administers FCA-regulated loans for Buckingham, the University of Law, Cranfield, and OPM-delivered courses at King’s, Cambridge and LSE, with the university carrying the risk and free to sell the cashflows on. Such a loan can be pursued wherever the graduate lives, solving O’Brien’s collection problem without touching a single settled-status right, and applies the same discipline to the British student on a low-value course as to the Romanian STEM student. FCA regulation makes mis-selling harder; universities carrying the risk gives them a stake in whether graduates find work. Both problems are solved by the same structural change.
Westminster does not lack for small ideas. It lacks a party willing to put forward policies of sufficient structural ambition to match the scale of the challenges the country faces.