Tuesday, January 27, 2004

Rights & Reason: Blair Stumbles on Education

Tony Blair’s government barely survived a key vote in the House of Commons taken just a few minutes ago. Blair and his education secretary, Charles Clarke, have been pushing a package to reform the fee structure for English universities, all of whom fall under government control. This afternoon’s vote was on a preliminary motion to allow the reform bill to proceed to committee. Blair normally enjoys a Labour Party majority of 161 votes in the Commons; today’s vote went 316-311 for the government, a majority of just five votes. A defeat would have probably led to an official vote of confidence in the government.

The British have traditionally subsidized undergraduate education. In 1998, the Labour government instituted a fixed-fee rate for universities. Under this system, students paid an upfront fee of £1,125 per year (the fee was reduced or waived for lower income families). Students take out loans to pay these fees and their living expenses, and pay them back after they graduate when they earn more than £10,000 annually. Keep in mind, the £1,125 covers only a small fraction of the university’s expenses—the taxpayers still foot more than 90% of the bill.

Under the new Labour proposal, the upfront fee will be replaced in 2006 with an annual fee set by the individual university—no more than £3,000—which students will repay after they graduate and earn more than £15,000 annually. This means the government will basically loan students the money to attend school. But unlike a traditional loan, there will be no interest charged, and the amount to be repaid will be based on a student’s post-graduation income, not the amount borrowed. In practice, a student earning £18,000 after graduation will only “repay” £5.30 per week—or about £265 annually. The debt will be entirely written off after 25 years, a protection for those who don’t work in profitable fields or remain unemployed.

By American standards, both the existing British system and the proposed reforms are socialist nonsense. But even Labour’s modest reforms caused a major backlash. Many Labour parliamentarians want fees abolished altogether; they would increase taxes (on the wealthy, of course) to fully subsidize all undergraduate education. Labour opposes any effort to “marketise” the university system. They want education to remain a socialist program immune from market competition. This is why allowing the universities any discretion in setting charges is politically unpopular. To guard against opposition, Blair insists the £3,000 annual price cap may not be raised until at least 2009, and only then by a direct vote of both houses of Parliament. Blair may be a reformer, but he is not a capitalist.

This is what happens when you classify education, or any service, as a “right”. You’re left with arbitrary price controls set by politicians, persistently under-funded universities, and a system that cannot respond to changing demands. Opponents of Blair’s plan don’t want to see Britain go down the American road of having people choose a university based on ability to pay. But our system, imperfect as it is, offers not only a larger, more dynamic market for higher education; it also avoids the trap of being a constant drain on taxpayer revenue. We have the government-run elementary and secondary schools for that.

(And yes, there are many state government-run colleges in the U.S., but these schools still must compete in the market against private-sector schools. American politicians are also not as committed to socialism as their British counterparts, since almost all state universities here charge tuition that far exceeds the modest amounts being protested in England.)

An issue like this exemplifies the widening philosophical chasm between Europe and America. In this country, the movement towards free markets is growing, despite the opposition of establishment leaders. But across the pond, socialism maintains its death grip on the population. For this reason, I give Tony Blair credit for even trying to address the tuition issue. His reforms won’t produce much substantively if enacted, but his willingness to stake his government’s survival just to move the rock a few inches shows a level of character this country’s president would never demonstrate.

The burden now falls to Britain’s conservatives to develop a more substantial plan for reforming university financing, because Tony Blair cannot go any further without committing political suicide. Michael Howard, the new Tory leader, has suggested the idea of partially privatizing Britain’s universities, meaning they would subsidize undergraduate education from institutionally-controlled endowments rather than taxpayer coffers. Howard’s specific plan is still unknown, but he must act quickly to seize control of this issue.

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