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May’s plan gets a failing grade

The Conservatives have promised to review funding for higher education – but their ideas are incoherent. Matthew Partridge reports.

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Should May let universities increase fees and expand?

The Conservatives have promised to review funding for higher education but their ideas are incoherent. Matthew Partridge reports.

"Rejoice. The Prime Minister has got something important absolutely right," says Max Hastings in the Daily Mail. At the moment, "acquiring a degree has become an almost religious rite heedless of how silly is the course pursued, or how pathetic the learning institution' where it takes place". Therefore, Theresa May should be applauded for denouncing "the colossal racket of across-the-board maximum university fees". She is also correct to announce a review of higher-education funding, which is expected to recommend that "in future, fees will be determined by the benefit to the student and the benefit to our country'".

Unfortunately, the more you think about her plan, says Rachel Sylvester in The Times, "the more incoherent it seems". How can you possibly assess the true value of, say, computer sciences compared to classics? The announcement suggests that science courses could be made more expensive as they are more costly to provide and we need more scientists and engineers. But in that case, shouldn't the government be "encouraging people to take on those courses rather than slapping a premium on them"?

Having differential fees also means "the poorest pupils will be attracted to the cheapest subjects rather than fulfilling their true potential in the field of their choice". What's more, cutting fees "would disproportionately benefit the wealthiest graduates", since low earners never pay off their student loans. To make matters worse, one study suggests that trimming fees from the maximum £9,250 to £6,000 would leave "a £3bn black hole in universities' finances".

This "tinkering" will not pay off for the Tories, says Stephen Bush in the New Statesman. Total abolition "is the only policy lever that could match Labour electorally". In any case, says The Daily Telegraph, governments should not try to fix prices in higher education.

"That is a Labour approach, not a Conservative one." Instead, leave it to the market. May should let universities increase fees. Under this system, "a different price would apply for every course at every institution". As a result, "good universities will charge more and expand", while "courses that cost more than they benefit will fold". That way, prices "will more properly reflect value".

Labour threaten scrap PFI without compensation

The Labour party has already indicated that if it gets into government, it will terminate existing public-private partnerships under the private finance initiative (PFI) and renationalise some utilities, says the Financial Times. Shadow Chancellor John McDonnell has now said that "some investors in PFIs may not receive compensation". If he is serious about this, he "would set a worrying precedent".

Since the UK "is highly reliant on foreign investment any government must ensure investors feel welcome and trust the rule of law". Breaking contracts therefore "risks significant reputational damage". It also "raises questions about the intentions of the party under Jeremy Corbyn's leadership".

"There are genuine concerns about the efficiency and cost-effectiveness of PFIs", notes The Times. Indeed, "a report from the National Audit Office in January highlighted the lack of available evidence that these initiatives offer value for money to taxpayers".

This is important, because there are currently more than 700 private finance deals in operation. They have a collective capital value of around £60bn and incur annual charges of over £10bn. However, "for all the problems with PFIs" they are good at "spreading risk from taxpayers to private companies". In many cases they also do a better job "the nationalised British Rail was famously poor in its standards of punctuality and customer service".

Outsourcing "has worked best in back-office functionsand local construction, where competition can bite", adds Simon Jenkins in The Guardian. So by ruling out any role for the private sector, Corbyn and McDonnell are "staging another round of the 1940s bawling at the 1980s".

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