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Regressive debt distribution: recent government responses

August 6, 2014

On a few recent occasions the Scottish Government (SG)  has been invited to respond to the findings detailed elsewhere on this site that funding arrangements in Scotland mean that the poorest students here face the highest debts, a situation not found anywhere else in the UK.

It’s worth bringing these statements together, as they form at present the most complete government response to the critique of the present Scottish system as unusually regressive.  The most obvious point to make is that the Scottish Government persistently refuses to engage with the substance of the issue, although it never denies it.

The Cabinet Secretary was asked in the Education and Culture Committee on 29 April to comment on a quote, taken from material on this site: ““In Scotland, uniquely in the UK, graduates who started from poorer backgrounds are now expected to leave university with a higher debt, and therefore face a higher de facto tax on their future earnings”.

His response is quoted below in full, but with some notes:

I want to make two points about the latest analysis that has been provided by Lucy Hunter Blackburn, who seems to return to this issue again and again. First of all, it makes a number of very broad assumptions. For example, it assumes that the accrual of debt loan uptake in 2014-15 will be the maximum of each individual Scottish student’s eligibility [Note: I have simply used the same assumption as the SG makes in promoting its student support package, in particular the “minimum income”]   which is not normally the case [Note: the SG has told me that it holds no data to support the Minister’s statement that loan uptake is not normally at the maximum: however analysis of the published  figures shows that loan up take at lower incomes is relatively high, and higher than it is further up the income scale].

More seriously, the analysis fails to properly recognise the existence of free tuition [Note: the comparative analyses here include all forms of debt, for fees and living costs]. That is a very considerable issue, because it saves all Scottish-domiciled students having to pay sums of up to £9,000 per annum, unlike their counterparts in England, who must pay. That is a debt burden, and with free tuition there is a real saving that does not become a debt. That needs to be factored in.

I note that, in August 2012, the NUS called this

“the best support package in the whole of the UK”,

but Lucy Hunter Blackburn seems to find it difficult to cope with that view. When you take into account the fact that, as part of that package, student fees are not being borrowed, you suddenly realise that it is

“the best support package in the … UK”.

You cannot get round that, and I do not know why some people spend so much time trying to do so. It is a fact. [Note: this claim is analysed, and challenged,  in detail here.]

A full response from me addressing the implied criticisms in the Minister’s statement is  on the Committee’s website,  under the 29 April papers here. The implication that the government should not have to endure any sustained critical analysis of its policy in this area is notable  (for those with any interest in my motivation, see here).   Most striking, however, is that there is no attempt to deny or defend that it is inherent in the design of current policy that a disproportionate share of student debt falls on poorer students in Scotland.

The SG also commented on the Guardian’s coverage of the regressive redistributional effects over time of SG student support policy.  Reporting the SG response, the piece noted:

A Scottish government spokesman did not dispute Hunter Blackburn’s figures but insisted the funding package tried to make the costs of studying “more sustainable and easier to pay back in the longer term” and was the most straightforward of any in the UK.

“This analysis fails to properly recognise the hugely positive impact on students of the Scottish government’s commitment to providing free tuition,” he said. “In England, most students have no choice but to take out loans to cover fees of up to £27,000 over three years.”

A more recent piece on increased student borrowing got this response:

The Scottish government did not dispute Hunter Blackburn’s analysis, but said it was clear that Scottish students still had lower debts on average than others in the UK. A spokesman said the loans offered students more flexibility in how they supported themselves. In addition, 12,175 college students received educational maintenance allowances worth £8.3m in 2011-12.

These responses beg more questions than they answer:  “more sustainable” for whom?; “easier to pay back in the longer term” compared to what? (not grant, clearly).  In characterising English fee debt as “no choice” but Scottish debt as a form of “flexibility”, there’s a hint that living cost debt is somehow more optional.  But that fails to reflect the the reality of borrowing by the poorest, whose behaviour shows much less evidence of “choice” than that of the better off – unsurprisingly.

There are the obligatory cross-border comparisons. The impression is given, not for the first time, that the general comparison with England, in particular, is far more important to government than issues of distribution within Scotland. Though in one case, only  England and only  fee costs are mentioned, in another (“lower debts on average than others in the UK”) the comparison is more complete: it appears either to be based  on the annual borrowing differences cited in the article, which an extra year of study will remove, or on historic final debt, often used by the Scottish Government, a problematic measure the difficulty with which is explained here.   There’s also an accurate, but in this context slightly baffling, reference to EMAs, but not to the much more significant spending on FE bursaries, where in fact the SG has a decent story to tell. Perhaps the contrast between bursary-based approach in FE and the loan-based one in HE is regarded as unhelpful.

Most significantly, there is no acknowledgement, but also no denial or defence, of the regressive effect of government policy in Scotland.

The approach already identified elsewhere on this site (“The focus is always on other things – absence of fees, comparisons with England,  students’ immediate spending power, UCAS statistics.”)  continues to be central to the response.

Nor do these lines appear to have been formulated in the expectation that they would be subject to any thoughtful reading.  What does

loans offered students more flexibility in how they supported themselves

mean, on consideration?  Selling possessions or taking out a commercial loan both  offer “flexibility” compared to having  nothing to spend at all.  A government loan is a better deal than a commercial one.  But compared to a grant, which is what this debate is about,  the only flexibility a government loan offers you is the flexibility of spending money now rather than having it to spend later.  As Nicola Sturgeon once put it: “a graduate with £11,000 or more of debt will find it much harder than one without to buy a home, start a business or save for their retirement”.  Yet this gift of “flexibility” is being given predominantly to those who started poorest and are least likely to have access to family cash in later life.  Orwell would have appreciated the turn of phrase.




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