Monday 24 June 2013

How to wreck the UK's HE sector, and the UK economy into the bargain

Details have been revealed of government plans to sell off the student loan book, as part of the Conservative desire to privatise anything that isn't nailed down. The old chestnut that private is inherently better still holds sway (G4S, ATOS, A4E shining examples of success and probity in the workplace). But if the loan book is to be made fit for private profit making, it will have to be fattened up. (If private is so much better at running a lean ship than all these allegedly bloated and uneconomic government departments, you wonder why they can't just take it on as it is, but there we are.) And in order to fatten it up, one of the solutions being mooted is to change retrospectively the way loan repayments are calculated.

As the Guardian suggests there is a big difference between short term debt and long term liability. One of the reasons the long term loan book is looking a little forbidding is that graduate salaries are not rising as fast as expected. Those in charge should talk to Mr Osborne about that - apart from the 1%, nobody's salary is rising, in fact many people's are retreating, all as a direct result of his austerity measures. And of course they should talk to Iain Duncan Smith, whose poisonous policies are destroying jobs and ensuring poor terms and conditions for those lucky enough to hang on to them.

Leaving aside the doctrinaire economic short termism, there seems to be no awareness of what such a policy would do to future prospects for the HE sector. For any scheme like this to work - in which people pay back over a long period of time, and potentially large sums - there has to be confidence. A government that is prepared to change conditions retrospectively once, can do so again. They've already done one change this year without blinking an eye, changing the law retrospectively on benefit rules to avoid payouts to people badly informed about their benefit conditions, so it is clear that there is no clue about the principle that changing laws retrospectively is a really bad idea. Anyone unsure about their prospects after university is going to think long and hard about whether to take that risk. So we will have fewer people going to university, which will damage the long term prospects of the sector. Even discussing the possibility will have a chilling effect on many people currently considering going to university. Yes, take up of student loans is bigger than expected at the moment: that won't last.

And with that it will damage the UK's economic prospects. Osborne and Duncan Smith appear to be happy to push the UK towards a low wage, low condition economy, with even greater inequality built into it than there is now. But that is no way to compete in the world. We cannot compete on price with the emerging economies. It doesn't matter how far down we can push wages and employers' costs, they will never reach as low as China, India and Brazil. Should wages in those countries rise to match ours, there will be another wave of economies with low wage but well trained workforces emerging - Mexico maybe, South Africa maybe, Vietnam maybe. There will always plenty of places on the planet where skilled people work for less than we do. So to compete, we need ideas, brains, intellectual property, things that we can do better despite the extra costs of having decent living standards. And where do we get those things: at universities. And if the universities are not there, our comparative advantage in applying brain matter to the problems of the world will wither. To keep us prosperous, and, heaven forfend, to have some surplus to share around, we need a genuinely, strong, vibrant, keen, competitive higher education sector to which the brightest and best will be attracted, without a minefield of potential payment problems to tiptoe through first.

We weren't surprised working with the Conservatives to discover that they were still quite nasty, despite David Cameron's best efforts to present a kinder, gentler sharp toothed jungle animal. But we really didn't expect them to be this stupid.

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