On the weekend I spent an hour in a bathtub with a dyed-in-the-wool conservative[1], discussing the merits of various solutions to the world’s problems – not a very fruitful discussion, since we disagree on many things, but we are easily able to agree on the horrible situation the UK faces, and during the discussion I mentioned my plans for a blog post on the Tory education policy, so here it is. The particular question I’m interested in is “will the Tory education reforms reduce inequality?” I don’t want to address the wider question of whether they’re any good, because I don’t know much about the education sector in the UK. It seems prima facie the case that cutting funding to a largely government-maintained sector by 25% (or is it 20?) isn’t going to be good for that sector, at least in the short term, and my impression in the UK was that the sector is generally in pretty poor shape – but I don’t know enough about it to be sure, so I’ll leave my opinions out and focus on the question of inequality.

This post is a question rather than an answer. I’m phrasing my opinions from here on in as definite statements of fact (using words like “is” rather than “appears to be”) but I’m not sure I’m right or wrong on this topic (it’s out of my usual area of concern, that’s for sure!) so I welcome comments with more information or different views.

Also note that I’m writing this post on the assumption that both the previous Labour government and the Tory government care about inequality, and that all policies enacted aren’t window-dressing. Some people think that such a claim about Labour is pretty dubious (and I tend to agree); others think such a claim about the Tories is ridiculous. I actually believe that at least some Tories (i.e. the Bullingdon club) do care about inequality, but it’s my belief that in general their policies are going to be a disaster for this aspect of British society. However, ineffective policy and lack of policy commitment are different issues, so I’m not going to address claims that the Tories don’t care about inequality.

Graduate Tax Education Schemes

The Tory education reforms are, in essence, that they will widen the scope of universities to charge fees to undergraduate students – i.e. they’ll increase the cost of a university degree, basically – and in some cases they will allow universities to charge really shocking amounts, but in exchange they will put in place a bunch of additional measures to ensure access to university for poor students. The policy is really just an extension of the previous policy (detailed here), which was in turn a rip-off of the Australian policy, which has now been around for about 20 years, and which I studied under. The basic way such policies work is:

  • Universities charge all or a portion of the total cost of education to the students
  • Students take out a loan from the government for the cost
  • Students repay the loan after graduation
  • Typically loan repayments are through the tax system, and commence only above a certain wage
  • The loan is usually at lower interest than the market rate

Typically the loan only increases with inflation, rather than charging real interest. This type of policy can be characterized as free education with a graduate tax, which is applied for varying lengths of time depending on the course you undertook. When I went through university (in Australia) the price of the course was only a small portion of its real cost, and the government paid a basic wage equivalent in value to welfare, which was essentially a grant, to all students from poor backgrounds or above a certain age. Since then the fees have increased as a percentage of the cost of the degree, but the previous conservative government (under John Howard) loosened up the rules on that basic wage, so it was more accessible to students. In the UK it appears that students can take a loan for their living expenses[2], which they pay back in a similar fashion to the fees. I think this is the key problem with the system as it stood in the UK – coming from a poor background and having to take a loan for 4 years of education plus fees seems like a pretty big imposition, though I think concerns about the importance of this can be overrated, and don’t take into account the anti-intellectualism of the lower working class, which I’ll come back to at the end of this post.

The Tory Reforms

The Tory reforms are outlined on their website, and basically involved the following:

  • Double the current cap on fees the universities can charge students, from 3000 to 6000 pounds, and allow fees of 9000 pounds in exceptional circumstances
  • Where universities charge above 6000, require them to provide scholarships to poor students to access the university
  • The threshold for repayment of the loan will increase to 21000 (so you have to earn more than 21000 pounds before you need to repay the loan)
  • The loan will be written off after 30 years
  • The loan will be extended to part-time students
  • The government will increase the current living expenses grant for poor students and raise the threshold above which it cuts out
  • Loans for living expenses will be available regardless of income
  • The government will introduce a new 150 million pound scholarship system for low-income students
  • The government will “consult” on ways to prevent rich students from paying off their loan up front and getting out of the progressive repayment system

This policy seems to only contain one bad point – the massive increase in the cost of fees. If playstations were increased in price by 300% tomorrow the nerds would be rioting in the streets, so I can understand student anger at this. But it’s a loan, not an upfront cost, so it doesn’t really matter what the government charges – this is the attitude I took with my education, anyway, and it’s paid off in spades (we’ll get pack to this).

In fact, I think there are key points in this that reduce inequality in access to education significantly. These are (presented in no particular order):

  • Requiring scholarships from top universities: everyone knows it will be the top universities that charge the higher amounts, and requiring them to provide scholarships will mean that potentially more students from poor backgrounds can afford their fees. Access to the top universities in the UK is as close to a guarantee of a good job as you can get in this world, and along with removing the last vestiges of class barriers to entry to these universities (such as interviews) in recent times, these changes will force the universities to admit more poor students
  • Changing the repayment thresholds: Worries about how crippling the debt repayments will be are certainly important factors in the decision to go to university, and setting these repayment rates so they’re affordable but enable students to pay off their loans in a reasonable time is important. It’s also important that the debt doesn’t skyrocket before you can pay it off (as happens in New Zealand) and doesn’t kick in when you are earning too little to afford extra tax. These changes make the repayment rates more progressive
  • Getting rid of early payment benefits: The think that shits me most about the Australian system is that paying your fees upfront gets you a huge discount (currently 25%, I think). While I understand there are economic reasons for doing this (about reducing risk, etc.) it basically means that people with a cool 10000 pounds to spare get their education for 25% less than people with no capital. This is a classic case of “free to those who can afford it” and an example of one of the main ways by which poor people stay poor and rich people stay rich. When you don’t have the spare capital to invest in stuff, you end up paying more – reducing your ability to save up that same capital. It’s an evil poverty trap, and the benefits (guaranteed immediate income for the government) are not worth the inequality effects. Governments can afford to bear risk – that’s why we have governments! – and in this case the deferred income is more than made up for by the inequality avoided. If the Tories do find ways to get around this problem – they were even discussing an early payment penalty recently – then they’ve made significant inroads into killing a huge financial benefit provided to the already-rich.
  • Extending living expenses: For me, a poor student with no capital (I had $250 when I arrived in Adelaide to go to University, enough for the student union fees and nothing else ) and no job and no parental support (my parents contributed $0 to my education and living expenses from the age of 16), the single biggest deterrent for going to university was finding a way to finance my living expenses. I had a pretty burdensome degree (physics) and I didn’t want to work while I was studying, but even if I did, I would have been unable to earn much – or guarantee a job, in 90s Adelaide. Fortunately the Australian government provides a maintenance grant, which though not exactly sustainable in the long-term is sufficient to get you through university. Knowing this, decisions about going to university were easy – I decided to go, and if I couldn’t get a job I’d have the grant. This concern must be a real killer in the UK, where the cost of living is outrageous and the best universities are in rural towns with very little available work. For people from poor backgrounds like me who don’t care about the size of the loan but really worry about how we can pay for food and rent, a good maintenance grant is essential. The new Tory policy seems to provide this.

For me the extension of maintenance grants is the key to enabling access to poor students, especially for universities outside of London where part-time and casual work sufficient to support 4 years of study may be unavailable. I don’t think anyone I studied physics with held down a part-time job after 2nd year due to the enormous amounts of study time involved (we had 6 assignments a week, and Classical Field Theory assignments alone took 12 – 15 hours of our week!) I know that engineers and medicine students had even more work than I did, and couldn’t juggle it the way the humanities kids did, so they weren’t able to easily find work. In Australia this isn’t such an issue because students don’t move away from their home town to study – they mostly live with their parents – but in the UK it’s a significant problem. UK students can take a loan but taking a loan for living expenses and fees leaves you saddled with a huge debt that wealthier kids, or kids who could stay at home, didn’t need to incur. This is a major inequality problem.

Overall I think that the Tory policy contains the four key ingredients needed to make university access more equitable in a graduate tax scheme, and crucially it attacks the two key causes of inequality in education access – it extends maintenance grants and attacks the early payment benefits of previous systems. I suspect a side-effect of this will be more mobility for poorer students, enabling the most talented poor students to take up remote courses – either specialized courses or courses in better universities – that they might previously not have taken due to fears over the cost of living and the risk of taking a huge loan to cover living expenses. This will be good for the UK overall, since better talent accessing more suitable courses means a better workforce.

A side note on anti-intellectualism in the working and lower middle classes

A common complaint about graduate tax schemes is that they saddle poor kids with huge debts that they won’t want to bear, and that poor people are afraid of debt or, having a lower income to start with, see debt of a given size as more prohibitive than wealthier people do. I think this is, within reasonable limits, bullshit. England is going through a massive housing crisis, at least one small part of which is due to people taking out huge house loans they can’t afford, in the hopes of making short term gain on “the property ladder.” Though I don’t believe they were the cause of the crisis, poor people seem to have been just as willing to take these risks as their wealthier compatriots, for no more reason than the possibility of making a 10% profit in a few years. Poor people are quite happy to take a risk on a large loan – in fact, on a loan way larger than those for a uni degree, with much higher repayment rates – and while it could be argued that yes, these people (usually!) have jobs, they don’t get any deferred repayment options or reduced interest, so I think the size should be more rather than less relevant in their case.

Given that it is well established that the single best investment in future income that anyone can make is a university education, the idea that poor people will be discouraged from university by a total debt of a mere 12-24000 pounds is pretty shonky, unless poor people don’t realize that an education is the best future investment possible. If their parents were willing to take a 150,000 pound loan for a high-risk short-term profit opportunity, why should their children be perturbed by a 24000 pound, low-risk guaranteed medium term profit opportunity? The only possible explanation is that poor kids don’t realize that a university degree is the best guarantee of future earnings. And who, largely, is responsible for this misperception? Their parents. The lumpen proletariat, working and lower-middle classes in the UK are strongly anti-intellectual, and value economic risk for material gain over economic risk for intellectual gain. To a lesser extent this is true in Australia too, in my experience, but it’s more noticeable in the UK. If poor people want to help themselves they need to shake this attitude, and time and again you see the same phenomenon – poor kids who went to university return to their communities and find they are no longer understood or respected because they’ve become “posh.” While I think state schools have a role to play in countering this bias[3], ultimately parents and family are the key determinants of these things and poor communities just aren’t interested[4].

Given this, a graduate tax scheme shouldn’t in and of itself be seen as a barrier to poorer communities accessing university, though obviously saddling kids with a huge loan for living expenses – in the new scheme it will possibly total more than 35000 pounds – will be a genuine discouragement. But the basic loan sizes are far smaller than poor families were willing to risk in the housing market, with far more benefit. So a combination of maintenance grants, costs deferred through low-interest loans, and scholarships should not be considered a disincentive for poor people to attend uni, unless those loans are really really high.


I think the Tory education reforms are a significant improvement on the Labour policy, and go some way towards reducing inequality in access to education in the UK.

fn1: who claims he isn’t, so regardless of the worthlessness of terms like “conservative” and “right wing” in describing actual people, I aim to apply this word to him egregiously

fn2: which the administering body will cock up delivery of

fn3: For example, I discovered what University was at the age of 16 through my high school careers councillor – my parents were thoroughly uninterested in my actually using my obvious mathematical and language skills, so even though I’d been saying for years that I wanted to be a scientist they never actually even looked into how I could go about doing this. Science, they seemed to think, was for rich kids.

fn4: For this I also blame the unions, who in the last 10-20 years have retreated from their role as broad enablers of community achievement, instead focussing more and more narrowly on workplace issues[5]

fn5: Not to mention, of course, labour parties, who are the key force for cultural and political change in poor areas, and have given that responsibility away