An equitable solution to funding higher education

Tony Blair is saying if your degree makes you rich, you should pay back a fraction of what we all spent on it
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It has become a Westminster cliché to say that the Tory opposition to top-up fees is inconsistent. Sincere free marketeers such as Michael Portillo ask: don't Conservatives want individuals to pay more for the services they use, like health and education? But this is based on a fallacy - that the Tories support free markets across the board. In fact, Michael Howard's position is perfectly consistent with Tory strategy throughout the 20th century: he is acting in defence of a vast middle-class subsidy. Nicholas Barr at the London School of Economics has shown that 81 per cent of the children of professionals go to university, compared with only 15 per cent of kids from poor families.

The Conservative belief in free markets has almost always been applied selectively: the cold slap of the markets is thwacked across the face of non-Tory supporters like the poor or the miners, yet warm market-defying subsidy is wrapped around Tory voters like farmers and those Mortgage Tax Relief-supping suburbanites from Basildon.

It makes perfect sense for Conservatives, then, to oppose top-up fees, because the whole country is paying for their base to reinforce their already-privileged place in our society. What I find harder to understand is the position of the Liberal Democrats and Labour rebels. They seem to honestly believe they are opposing top-up fees on behalf of their working-class constituents. Yet the Government's position on top-up fees is, in fact, one of the most progressive policy initiatives it has launched in the second term. Tony Blair is saying, quite simply, that if your university degree makes you rich, you should pay back a fraction of the money we all spent on it.

The argument that top-up fees will dissuade the poor from going to the best universities is based on a fundamental error. The poor can only be put off by top-up fees if they fall for the scare-mongering propaganda of the antis rather than the reality. The truth - which must be repeated to every potential student ad infinitum - is straightforward: no poor person will pay a penny in top-up fees. You will only ever be asked to pay something if you are earning £15,000 a year, when you will have to pay a fiver a week. If you stay poor - below 15k a year - you won't pay anything, ever.

No, this isn't perfect: 15k is hardly rich. But to pay for the expansion of higher education, the Government faced a series of options. The first possibility was to continue expanding places without giving the universities any extra cash to pay for it. That has been the approach for the last few decades. The result is that academic pay has declined by 45 per cent, and a student in 2004 receives half that received by one in 1989. The consequences of this are obvious: universities decline, the service becomes worse, and everyone suffers.

The second option is the simplistic Diane Abbott confection: increase university funding by hugely increasing taxation. Even if this were politically possible, would universities really be the best place to spend this cash? Wouldn't education for the under-5s - which is shown in all research to be the place where poor kids really can be lifted up - not be a more deserving beneficiary?

The third option is Michael Howard's plan: slash university places, close many of the new centres of learning (which contain almost all of the handful of mature and working-class students in the system), and return to the days when higher education was an even more lavishly-subsidised treat reserved for the middle class and the rich.

The fourth option is the strategy proposed by most of the Labour rebels, including Nick Brown: require students to pay large sums once they are earning enough to do so, but charge a flat fee rather than a differential rate. In plain language, this means that you pay back the same amount whether you have studied economics at Oxford or horse studies at De Montfort. I have some sympathy for this worry. There is a genuine concern that differential fees will make some students opt for a "cheaper", less good university. But this will only happen if the basic argument underpinning fees - that you don't pay if you're not earning - doesn't get through. And isn't there a question of basic fairness? Isn't it simply dishonest to claim that all university courses have the same value?

So the Government has chosen a fifth option: ask wealthy graduates to pay a bit back once they are earning enough to pay, and ask those who got onto the best courses to keep on paying a bit longer. That's reason enough to support the new moves - but they have married this policy to a massive shove to ensure more students from poor backgrounds get into the best universities. Cleverly, top-up fees will be used as a lever: only those universities which demonstrate to an Access Tsar that they are really making an effort to attract and retain working-class students will be allowed to charge the extra fees. I can't think of a better or more progressive policy, and if this package gets defeated in Parliament, the appalling status quo will remain. Could there be a more shameful "achievement" for the rebels?