Myth on tuition fees

The real myth on tuition fees is not one of those that was so well articulated by Alan Carcas in last week’s Guardian but a point which he overlooked: Who will really pay the fees?

The government’s intention is to reduce costs and to show what reductions have been made in time for the next election. There is always room on any balance sheet for so-called ‘creative accounting’ and successive governments have embarked on such schemes.

The Private Finance Initiative was one such scheme adopted by the last Labour government which meant that the building of, say, a hospital was paid for by some private company who then leased it back to the government.

This meant that the government did not spend capital but paid the costs out of taxpayer receipts. These schemes are not illegal but can be used to put a rosy glow on an otherwise gloomy scenario.

I believe the tuition fee fiasco will turn out to be such a scheme.

If no student is to make any repayments until they are earning in excess of £21,000 then the universities will get their funding from government coffers as at present, funded by us, the taxpayers.

The government’s balance sheet will however look much healthier as the Department for Education budget will reduce by the same amount as the student loan section increases.

This can now be categorised as a debt and not as government spending.

Thus at the drop of a hat George Osborne has reduced spending only for it to be replaced on the balance sheet as a debt – a much rosier picture.

That is not the end of it, as this arrangement lends itself to further manipulation further down the line. At some opportune moment the student loan book may then be sold off to private speculators for a fraction of its value in a similar way that the sub-prime mortgages were.

These became a major factor in the near collapse of the banking system. The money received by the government for the student loan book can then reappear in the balance sheet, allowing it to be spent on perks for boosting the government’s popularity and at the same time the outstanding debt item disappears just like magic.

The real myth is that the students will be repaying their debt – as many of them may never earn enough.

The real tax-payer burden will be the difference between the overall value of the student loan book and the price someone will be prepared to pay for it.

Hence the whole issue of student tuition fees is a subterfuge to reduce the DfE budget sufficiently to accommodate the costs of setting up the so-called free schools.


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