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Could reducing tuition fees in England cost Scottish students £0.25 billion?

February 10, 2015

This question is prompted by setting recent media coverage of a possible announcement of a £6,000 fee cap by Labour against logic lately applied by the Convenor of the Scottish Parliament’s Education and Culture Committee.

Back in October, Stewart Maxwell MSP generated a fair amount of press coverage for his calculation that “Scottish students save £1 bn with free tuition“.   The figure, badged as “new research”, was a response to a request made to the Scottish Parliament Information Centre (the full document they sent to Mr Maxwell is here): it was based on working out what Scottish students would have paid in fees over three years had each new cohort entering the system been charged the average amounts applying in England in 2012-13, 2013-14 and 2014-15.  SPICe was not asked what the equivalent calculation would be for grant funding, where English spending is higher per head, so that element was not included.

In a common pattern for this sort of piece, the Press Association picked up and repackaged the material in the SNP press release, and the PA report was then run  in near-identical terms in The Scotsman, The Herald and The Courier (only the Courier credited PA), and in various less high-profile places, with the headline “Students ‘saved £1bn under SNP’ (Courier), “Scots students have saved £1bn in tuition – SNP” (Scotsman) and “Scots students save £1bn in tuition fees under SNP” (Herald).  The SNP press release in fact avoids a direct claim that the SNP alone has saved students all this money (though that’s the clear implication): it was the headline writers who made the point explicit.

What if  a lower fee cap of £6,000 had applied? A quick sum reveals that the saving would have been £0.26bn less.  So if a lower fee applies in England in future, Scottish students will save less.  Conversely, the higher fees are in England, the more Scottish students save …. Is that a good thing or a bad thing?

These are all, of course, pretty peculiar calculations, because they depend on the premise that Scottish students are constantly at risk of having the full effects of English fee policy applied to them.    This despite there being no party here advocating fees at the English level (other than for rUK students, for whom the current Scottish Government has famously argued the case for such a fee, and applied it) .  Nor, as far as we know, does the government here have plans to set up a review body whose deliberations will be strategically timed over an election, the technique used by  successive Westminster governments to achieve fee rises.

It’s certainly fair to say that without devolution Scottish students might well have ended up in the same higher fee regime as now applies in England: but we have now had devolution for almost 16 years and for 15 of those Scottish students have been treated more generously for fees, under governments of various parties. Really, it’s  time to start taking our own policy making in this area as seriously as that of our neighbours.

And that’s the point of this post.  Rather than worrying away at how students would have been affected if devolution had never happened, shouldn’t those in a privileged position to do so be examining the effects of decisions which have actually been taken in Scotland in recent years?

So we might ask  what students have saved from the abolition of the graduate endowment versus what more they have lost  as a result of more recent reductions in grant.  At 2013-14 prices, the total saving in endowment payments is £32 million (see here: page 44), while the total reduction in grant spending since 2006-07 is £56 million (footnote 2 below), giving a net annual  loss to students of £24 million. 

As I showed  (pp 45 onwards), it is possible to go further and chart the relative winners and losers from these two exercises: low-income HN-level and degree students in particular have lost, while higher-income degree students have gained the most: so the net loss masks a greater loss concentrated on those from lower incomes.  This analysis has been in the public domain for a year. The Scottish Parliament’s Education Committee under Mr Maxwell has never looked into this effect, however.

Mr Maxwell  has instead continued with his interest in the £9,000 fee, taking the time to do a different calculation of what Scottish students have been saved for this piece from January.  A recent proposal to increase the lower Scottish repayment threshold for student loans, which would be a significantly progressive more,  was dismissed with further comments on English fee policy (as discussed here). And as this post discussed, Mr Maxwell’s Committee does not  seem to be concerned  that information provided to it by the Scottish Government in 2012 over-estimated  the numbers likely to claim the low-income grant for young students under then new system by some 25%.  Discussions in the Committee have barely touched on the increase in student borrowing  from £241m in 2013-14 to £468m next year.

Mr Maxwell once took more interest in decisions affecting Scottish students directly, saying in 2007:

Labour’s policies since 1997 have been disastrous for Scotland, removing grants, imposing student loans and tuition fees, and leaving our graduates with massive debts… Labour have plunged Scotland’s students into thousands of pounds of debts. The SNP have taken the first step to alleviating that debt. I know students and their families will welcome this decision.

Reductions in grant and increases in loan for Scottish students are themes to which he could now return.  He could make the fair point that the Scottish government’s room for manoeuvre is considerably constrained by what’s happening with the Barnett formula, but still examine the impact of not giving living cost support at lower incomes the same priority as fees in the cash budget, which is a purely local political choice.

There has been a serious gap in the scrutiny of the  Scottish government’s decisions on student funding over the past three years.  In the hugely privileged position of convenor of the relevant Holyrood committee, Mr Maxwell is uniquely placed to put that right (think of Alex Neil’s use of the same post to push forward policy on lifelong learning a decade ago).  Just because he is a government backbencher doesn’t mean he can’t ask the government hard questions (think Christine Grahame on corroboration).  All that’s needed is for  the detail of policies made in Scotland to exert as much fascination as decisions taken over the border.

Footnote (1)

Credit is due to the SNP for publishing the whole SPICe note.  As well as setting out the detail of the calculation it includes some other observations, including:

It might be worth stressing that these figures tell us how much revenue HEIs in England are able to generate from the increased tuition fee now in place – and what income HEIs in Scotland would be able to generate based on charging the estimated number of students the same average tuition fee as charged in England. What these figures don’t tell us is how much government spending goes on tuition fee loans.
As some students will not take out a loan for some or all of their tuition costs, the government only need to meet the cost of any borrowing to cover the cost of tuition fee loans. …
One final point is a simple note of caution as these figures are very much estimates based on a set of assumptions that should be in the right ball park, but may not (if we had more detailed figures) come out exactly the same as we are estimating.

That’s a reminder that the other way to look at all  calculations like this is as a proxy for the cost of investment in undergraduate tuition (it’s not perfect, as the net fee in England appears to be higher than funding per student in Scotland, while against that, the cost of funding EU students in Scotland is not included).

Footnote (2)

The latest out-turn data from SAAS, not available when I wrote the original report, shows that total spending on all forms of non-repayable grant was £103 million in 2006-07  and £65 million in 2013-14, all at cash prices.  Using the most recent GDP deflators, the 2006-07 figure becomes £121 million at 2013-14 prices, giving a fall of £56 million per annum.   Reduced spending on Young Student Bursary accounts for most of this.

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