Alan Ryan: If this is Mr Brown being radical, heaven help us

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The Independent Online

Some grumbling and disgruntled people will doubtless say that Gordon Brown failed to say anything about education in his budget. Not true. He said he'd give primary schools another £2,000 a year on their capital grants. Bully for them, and nice of him. The grumblers with a point will include the vice-chancellors of the country's universities who think that higher education is short of something like £5bn. And for them the Budget is a bit alarming – though in the long run its treatment of the NHS is a good deal more alarming still.

The silence on higher education in the Budget speech was unsurprising. Brown budgets are short, tend to hit one major issue and leave everything interesting to be announced – many times – when the Treasury's battles with the spending departments are over. This year, with the tri-ennial spending review coming up, it stands to reason that everything interesting about higher education funding will emerge in several months; we have the assurance that something will be done in due course. The only concrete news is that underpaid lecturers will lose another one per cent of their pay to National Insurance.

There are grounds for concern. Gordon Brown's obsession with productivity is well known. Britain's failure to invest in research and development is an old story. The inability of universities to earn enough from industrial R&D because firms underspend and universities under-charge is another old story. The Budget speech was all about making life easier for very small companies, to which R&D is largely irrelevant. The accompanying statement included R&D tax relief for larger companies, which may indirectly help universities. Notably absent is anything about revamping government support for research, providing adequate overheads, and helping universities to charge sensible prices for their work. Progress may yet be made, but the Budget would have been a natural platform to announce it, if any serious answer to Ian Gibson's select committee report was intended.

Student support looks like another area where everyone needs to brace themselves for disappointment. Gordon Brown's enthusiasm for targeted benefits suggests there'll be bursaries for the deserving poor, but no suggestion of abolishing tuition fees or restoring student grants for the better off. Rumours that the Treasury would like to charge commercial rates on student loans should send shivers down student spines. Owing any amount of money on an income-contingent, zero real interest basis is fine; I'd take a million pounds without hesitation. Borrowing even the present £12,000 under a system that charges real rates of interest is another kettle of fish, particularly if it's a system that rolls up unpaid interest into the capital borrowed – in effect, a mortgage.

The more sinister implications, however, are those that we can draw from the tax increases to pay for an improved NHS. The unwillingness to think about whether a health care system designed 60 years ago is appropriate for the 21st century is bad news; the unwillingness to think of ways of luring private money into the NHS is very bad news. The implications for higher education are positively grim: the tax rises in this Budget are supposed to be the end of tax rises for the indefinite future – anyone who thinks that higher education can expect more help from the taxpayer is out of luck. And the Chancellor's belief in public funding for public funding's sake suggests the money won't be coming from anywhere else, either.

If this is radical thinking, heaven help us. Even the 1 per cent levy for the benefit of the NHS is only a local version of the 1.35 per cent Medicare tax that the American government tacked on to social security a decade ago. But, the refusal to look at the principle of "user pays" more carefully is bad news for higher education. Of course, when providers charge and users pay, people with higher incomes have choices not available to people with lower incomes; but it also makes funds available to look after the hard up.

Harvard and Princeton give their worst-off students an education for free – no loans, no nothing – not the University of East London or Wolverhampton. In Britain, something more like a market in higher education would increase consumer satisfaction and relieve public funding. But it will need a much newer Labour government than this one to introduce it.

The writer is warden of New College Oxford