David Laws, GK Adviser and Former Minister – Response to Augar

The government has today announced its (very!) long awaited response to the Augar Review on post 18 education finance. The announcement will be eclipsed by the dramatic news of Russia’s invasion of Ukraine, but it is of importance for the long-term outlook for post 18 education.

The Augar Review was originally inspired by Theresa May’s desire as PM to offer a reduction in student tuition fees, after this became a major issue in the 2017 General Election.

It is believed that May wanted fees cut to £7,000 or £7,500 – perhaps with higher government grants to protect the more “expensive to deliver” courses. There was also a strong desire to shift financial resources away from “low value” Level 6 HE courses, towards Level 4/5 provision in subject areas of greater relevance to skills shortages and the labour market.

Today’s news indicates how far the government has moved from the initial May/Augar vision. Tuition fees will remain at £9,250 for the rest of this Parliament, and quite possibly beyond. Labour has also, under Keir Starmer, moved away from prioritising lower tuition fees. Instead, policy makers will allow inflation to gradually eat away at the real value of fees, which will over time put greater pressure on university finances.

Not only will students be stuck with £9,250 fees, but future students will be expected to start repaying their loans at a much lower level of real incomes – £25,000, instead of over £27,000 at present. The government and the Treasury have decided that students must pay back a lot more towards their loans, rather than allowing taxpayers to take the strain. As well as repayments starting earlier, payments for many will last much longer – for 40 years (before write-off), rather than the existing 30 years. However, in one piece of good news for students, the interest rate on student loans will be cut, so that it is limited to the RPI measure of inflation.

Overall, the changes to student repayments are regressive – lower earning students will pay a higher proportion of income, while higher earners gain from the lower interest rates. The strongly progressive structure put in place by the Coalition government is being watered down.

Where the conclusions of the review do still follow some of the Augar agenda are around the more generous Lifelong Loan Entitlement for both HE and other technical post 18 courses, at Levels 4/5/6. And the two consultations on minimum entry grades for post 18 study and around student numbers control are very important shifts towards potentially restricting access to university courses to those with higher attainment, and to courses with higher labour market returns. This is another major shift away from Coalition policy, which allowed for sector and student led increases in HE places.

The reviews will be controversial, and could make a major difference to the final policy proposals. Disadvantaged students could be big losers from any attempt to restrict university places to those with higher grades, while those delivering courses that lead to typically lower paying jobs will worry that they could face new restrictions on student places. By establishing reviews into both these issues, the government is accepting that change is highly controversial and needs much further thought.

If you would like to discuss the landscape for education policy in the UK, please email louise@gkstrategy.com