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Maintenance Grants scrapped

January 15, 2016

My first post of 2016 moaned about the democratic deficit plaguing higher education reform.

Yesterday, 18 MPs gathered in a House of Commons meeting room to form a Delegated Legislation Committee. By 10 votes to 8 they voted to scrap all maintenance grants for new undergraduates in 2016/17. The voting followed party lines – the committee make-up reflecting the balance of political party presence in the Commons.

 

There will apparently now be a debate in the House of Lords, though I am not sure what force any associated vote might have. (Constitutional experts please chip in).

 

Gordon Marsden, now Shadow Minister for Higher & Further Education led the small-scale debate yesterday. A shorter version of his talk can be found online.

 

Unfortunately, he showed little mastery of his new brief leaning heavily on some numbers taken from an IFS response to July’s Budget.

 

Removing grants makes even less sense when you consider the Institute for Fiscal Studies conclusion that ‘this change won’t improve Government finances in the long-term.’ They went on to say ‘the replacement of maintenance grants will raise debt for the poorest students, but do little to improve government finances in the long run. The net effect is to reduce government borrowing by around £270 million per cohort in the long run in 2016 money – a 3% decline in the government’s estimated contribution to higher education.’  It’s therefore important to ask the why the government is embarking on this leap in the dark which will, as the IFS makes clear, diminish their contribution to HE while doing little to address the black hole?
If Marsden had read the full IFS paper, he would have known the answer to his question: freezing the loan repayment threshold transforms all these figures for savings. Converting grants to loans and combining it with the freeze achieves short-term presentational gains to borrowing and boosts the projected flow of cash back to Treasury, so improves finances in the long-run too.
Whatever the merits of Marsden’s other points about higher debt impacting negatively on participation, there’s no ‘leap in the dark’ in fiscal terms. By freezing the loan repayment threshold for all borrowers (who started since 2012), BIS has set a precedent that allows future governments to actively manage the ‘loan book’. To continute to talk of a ‘black hole’ misunderstands this change to the fundamentals.
In related news, Martin Lewis has written an open letter to David Cameron objecting to the retrospective changes levied on borrowers.  Lewis is also currently consulting lawyers with a view to backing a judicial review of the repayment threshold freeze. The following two paragraphs get to the heart of the issue.

As you may be aware, I have engaged lawyers who are currently looking at whether this change can be challenged legally. Yet this is just as much a moral issue as a legal one. A retrospective change will destroy any trust current and future generations can have in the student finance system, and perhaps, even more widely, in the political system as a whole.

The repercussions of this loss of trust may be far-reaching. Although I had reservations about the student finance changes made in 2012, I always believed it was more important to explain the practical realities of the system so no student was wrongly put off due to misunderstandings. But how can anyone in good conscience now explain student finance to young people when the system can be unilaterally changed, even after they’ve signed their loan contracts?

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One Comment
  1. Passing Visitor permalink

    Assuming these are affirmative regulations, the HoL could vote against them and they would not be made. But for regulations to be possible, Parliament must have previously delegated powers to Ministers, through a piece of primary legislation, to take decisions in this area. That is when the scrutiny role of HoL is most powerful.

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