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Public Services for All > Published by Guest, November 30th 2010 at 8:56 am

Double debt bombshell of Cable’s HE reforms

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Our guest writer is Andrew Harding who blogs at 2me2you.

Analysis by Left Foot Forward and on my 2me2you blog has shown previously that the implementation of the Browne review is driven more by ideology than a need to reduce “national debt [in the] national interest“. The BBC has been virtually alone in the mainstream media in reporting that “University fees reforms ‘will not save money’“.

Now the Office for Budget Responsibility have confirmed what many outside the mainstream media have long thought: that the shortfall in higher education funding over this parliament cannot possibly be met by the outcome of the Browne Review’s recommendations. In particular, the immediate cut to funding and the retrospective repayments mean an increase in net debt from 2012-13.

The OBR findings directly contradict Vince Cable’s remarks that the Liberal Democrat’s policy switch was dictated by a need to bring down costs. Responding to the publication of the Browne Review on October 12th, the Business Secretary said:

“My own party consistently opposed graduate contributions, but in the current economic climate we accept that the policy is simply no longer feasible.”

The OBR yesterday stated that:

“The Spending Review announced a £2.9 billion real terms cut in overall funding for higher education by 2014-15, with direct grants substituted for higher fees funded by increased loans to students. This proposal will therefore increase the value of the loans that the Government makes to students to fund tuition fees. Such loans are classified in the public finances as a financial transaction.

“The additional cash needed to fund the loans, net of repayments, increases the Government’s cash requirement (CGNCR) in any year and adds to the stock of public sector net debt (PSND), which is measured on a cash basis. However, financial transactions do not score directly in accrued measures of the deficit such as net borrowing, because the Government’s overall net liability position has not changed. For the November forecast the OBR has scrutinised and certified estimates of the additional loans that have been produced by the Department for Business, Innovation and Skills (BIS) for England. As the table shows, the impact on the CGNCR is estimated to reach £5.6 billion by 2015-16, cumulatively adding £13 billion to [Public Sector Net Debt] over the forecast period.”

Not many can reasonably suggest that graduates should make no contribution to their studies whatsoever. However, the shift in burden to the graduate paying the majority is by any reasonable standard unconscionable. It is a stark reminder that the government is passing the burden for a forward thinking and progressive society on to those citizens that can afford it. So much for the big society, perhaps “there is no such thing as society” after all.

  • http://twitter.com/tscholesfogg/status/9532649995501568 Tom Scholes-Fogg

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/grahamjonesmp/status/9532907097948160 Graham Jones MP

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/kantian3/status/9533090242236416 Gary Banham

    The nonsensical claim that the government's HE proposals are about national debt reduction exposed: RT @leftfootfwd: http://bit.ly/eU6Ocb

  • http://twitter.com/lloyd_r_m/status/9533130755014656 Lloyd Russell-Moyle

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/armadillos/status/9533177383092224 Gavin Lingiah

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/pmphillips/status/9533786609946625 Pete Phillips

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/scarletstand/status/9534353356886016 Emma Burnell

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/taobhcle/status/9534433505845248 Taobh Clé

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/benhumphrys/status/9534858741153792 Ben Humphrys

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/pamela_nash/status/9536130928091136 Pamela Nash

    RT @wdjstraw: Cable said fees u-turn was due to "economic climate" but OBR shows the policy will increase national debt http://bit.ly/eU6Ocb

  • http://twitter.com/_choobacca/status/9536773650653184 Charlotte Richardson

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/andy_s_64/status/9538040846356480 Andy S

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/dave42w/status/9538552681467904 Dave Warnock

    Double debt bombshell of Cable's HE reforms | Left Foot Forward http://ow.ly/3hlzv

  • http://twitter.com/beckyfh/status/9539306855075840 Rebekah Higgitt

    RT @Kantian3: The nonsensical claim that govt's HE proposals are abt national debt reduction exposed: RT @leftfootfwd http://bit.ly/eU6Ocb

  • http://twitter.com/vicki_s/status/9541408021028864 Vicki Trowler

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/2me2you2me/status/9541675017830400 2me2you

    RT @leftfootfwd Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL contributed by yours truly,get mainstream media on the case

  • http://twitter.com/andyprg/status/9541832996290560 Andrew Griffiths

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/chuzzlit/status/9543177308471296 Alison Charlton

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL @UCLOccupation @manoccupation

  • Steve Kelly

    I’m one who doesn’t believe anyone should have to pay for their higher education. We are a rich country and there is no reason why this cannot be funded. The reasons for the nonsense perpetuated by the politicians of all persuasions is because the so called debt is because we borrowed money of private bankers who control the money supply. If our Government controlled our own money supply there would be no deficit at all.

  • http://twitter.com/yorkierosie/status/9543854059425793 yorkierosie

    RT @2me2you2me: RT @leftfootfwd Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL contributed by yours truly,get mainstre …

  • http://twitter.com/paulstpancras/status/9546588984713216 paulstpancras

    Double debt bombshell of Cable's HE reforms | Left Foot Forward
    http://bit.ly/i1s7Ad

  • Julian

    The very first principle of the Browne Review, which you can read in the report on page 4, states:

    “HEIs must persuade students that they should ‘pay more’ in order to ‘get more’.

    This review was set up by the Labour government, who presumably set its terms of reference, including this principle. It would have been better if the review had looked at all the options for how higher education could be financed in other ways. It appears to have started with its conclusion.

    Interestingly, it also says (page 20):

    “there is broad agreement among groups with an interest in higher education that those who benefit directly from higher education as graduates ought to
    make a contribution to the costs. Employers and HEIs support this principle, as does the National Union of Students.”

  • http://twitter.com/chr1sr0berts/status/9547629323100161 Chris Roberts

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/goodoldmj/status/9548319848140800 Martin Johnston

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/jordanbhall/status/9549003486142464 Jordan Hall

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/mgmcquillan/status/9549517451960320 Martin McQuillan

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/alexdmaynard/status/9549598603350016 Alex Maynard

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/jon2aylor/status/9551152337125376 Jonathan Taylor

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/redploghb/status/9556318247452672 Harry Barham

    V Cable said fees uturn was due to "economic climate" but OBR shows the policy will increase national debt http://bit.ly/eU6Ocb #feesfury

  • http://twitter.com/chrispenberthy/status/9556388925677568 Chris Penberthy

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/chrisrjones/status/9558128949469184 Chris Jones

    If you thouhgt HE reforms saved money the OBR report shows they cost more in medium term + debt increase 2012-13. http://tinyurl.com/27ghd6m

  • http://twitter.com/dkernohan/status/9562925266112512 David Kernohan

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/patparslow/status/9563697848520704 PatParslow

    RT @leftfootfwd Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/jb_whovians/status/9566176485052416 John Breeze

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/lornamancan/status/9567848154267649 Lorna Harrington

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/newleftproject/status/9569217393201152 NewLeftProject

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/nusstudentmedia/status/9574881666539520 NUS Student Media
  • Nordelius

    A timely post. The arguments about access and student fees are important, but the argument that will change this government’s mind is the financial one. And the OBR, the IFS and HEPI have all confirmed this with detailed analysis.

    Let’s save the money and stick with the current system.

  • http://twitter.com/viclanger/status/9576174300692480 Vic Langer

    RT @NUSStudentMedia: Double debt bombshell of Cable's HE reforms – http://www.leftfootforward.org/2010/11/vince-cable-higher-education-c …

  • http://twitter.com/dkernohan/status/9576939744395264 David Kernohan

    Hey @timeshighered , @jessshepherd1 – It looks like @leftfootfwd has got the story that *destroys* #browne and #fees http://bit.ly/h2nYWy

  • http://twitter.com/tweetminster/status/9583612731072512 Tweetminster

    "Double debt bombshell of Cable’s HE reforms" http://goo.gl/Iq07t – Left Foot Forward

  • http://twitter.com/suukii/status/9583844227293184 Su White

    RT @dkernohan: Hey @timeshighered , @jessshepherd1 – @leftfootfwd has got story that *destroys* #browne and #fees http://bit.ly/h2nYWy #obr

  • http://twitter.com/dianehain/status/9585624826777600 Diane Hain

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL Just shows the duplicitous nature of the LibDems.

  • http://twitter.com/dianehain/status/9586616477687808 Diane Hain

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL Cable talks the talk, but he doesn't talk the truth.

  • http://twitter.com/dkernohan/status/9588949408284672 David Kernohan

    @timeshighered – if it's press day here's your lead story: @leftfootfwd has got story that *destroys* #browne and #fees http://bit.ly/h2nYWy

  • http://twitter.com/tess1959/status/9590018267947008 Teresa

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/ppetej/status/9590544862814208 Pete Johnston

    Via @dkernohan RT @leftfootfwd Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/kentishfella/status/9590862665228288 KentishFella

    RT @tweetminster: "Double debt bombshell of Cable’s HE reforms" http://goo.gl/Iq07t – Left Foot Forward > Pause thought, anyone?

  • http://twitter.com/2me2you2me/status/9591381043453952 2me2you

    The No.10 press office must be pulling at the stops out to make sure this doesn't get mainstream media attention! http://bit.ly/h2nYWy

  • http://twitter.com/5greenway/status/9592194197356545 Sandy

    Lib Dem fibs, via @ppetej RT @leftfootfwd Cable's con: OBR shows HE reforms increase both student debt & national debt http://bit.ly/eU6Ocb

  • http://twitter.com/cernyw/status/9593137286610944 RobSimmons

    RT @2me2you2me: The No.10 press office must be pulling at the stops out to make sure this doesn't get mainstream med… http://bit.ly/h2nYWy

  • http://twitter.com/dallas_invest/status/9594420923998208 dallasinvestment

    Double debt bombshell of Cable's HE reforms | Left Foot Forward: Analysis by Left Foot Forward and on my 2me2you… http://bit.ly/hyGwvC

  • http://twitter.com/ifferforbes/status/9596904224595969 jennifer forbes

    funding changes to uni education does not save money, it's ideologically driven. Check out leftfootforward http://bit.ly/h2nYWy

  • http://twitter.com/andy_s_64/status/9599215785222144 Andy S

    RT @tweetminster: "Double debt bombshell of Cable’s HE reforms" http://goo.gl/Iq07t – Left Foot Forward

  • http://twitter.com/helenbeetham/status/9600995898163200 Helen Beetham

    RT @dkernohan @timeshighered I love @leftfootfwd report on privatisation of HE. Not saving money, killing public ed: http://bit.ly/h2nYWy

  • http://twitter.com/bucktaylor64/status/9611398074073088 Andy Buckley-Taylor

    RT @tweetminster: "Double debt bombshell of Cable’s HE reforms" http://goo.gl/Iq07t – Left Foot Forward

  • http://twitter.com/sinnaluvva/status/9612949194805248 Malcolm Evison

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL

  • http://twitter.com/2me2you2me/status/9613017205440512 2me2you

    @channel4news #c4news @krishgm and crew – take a look at http://bit.ly/h2nYWy concrete analysis, #browne & #fees are ideological.. #demo2010

  • http://twitter.com/2me2you2me/status/9613185401229313 2me2you

    @TelegraphNews have you seen this? http://bit.ly/h2nYWy

  • http://twitter.com/2me2you2me/status/9613440163250178 2me2you

    @DavidHansonMP read this! http://bit.ly/h2nYWy #browne #fees are ideologically motivated…no doubt!

  • http://twitter.com/clroters/status/9614070332268546 Craig Roters

    RT @2me2you2me: @channel4news #c4news @krishgm and crew – take a look at http://bit.ly/h2nYWy concrete analysis, #browne & #fees are ide …

  • http://twitter.com/2me2you2me/status/9614603747069952 2me2you

    @OllyGrender hi Olly – what's your take on this? http://bit.ly/h2nYWy pretty damning…

  • http://twitter.com/fazzaron/status/9630930536759296 Farai Fazmataz

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://www.janamills.com Jana

    Page 51 of the Browne Review:

    “Government will need to fill this funding gap [for a graduate tax] in every year until 2041-42. The cost of replacing fees is ca. £3bn a year. If there is to be more investment in higher education – as our proposals foresee – then the bill for Government is even higher. This means that rather than contributing to deficit reduction, higher education will squeeze out spending elsewhere.

    In order to overcome this difficulty, we have considered hypothecating a graduate tax to the sector in order to allow universities to raise private sector finance against future tax receipts. The costs of raising finance will be high. Some estimates suggest the private sector may pay as little as 25%
    of the value of future tax receipts due to the slow build-up over time of the receipts and uncertainty about the amount. It is also likely that such a sale would be considered a tax securitisation, which the Office of National Statistics would classify as Government debt. Hence, even on this model, there would be upward pressure on the deficit from the graduate tax until 2041-42.”

  • http://twitter.com/yorkierosie/status/9674397052833792 yorkierosie

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/shibleylondon/status/9674780072476672 Dr Shibley Rahman

    RT @@leftfootfwd
    Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/wfseabrook/status/9674841724551168 Wendy Seabrook

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/myinfamy/status/9680971351728128 Daniel Pitt

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/razorsharplad/status/9687364746092544 Jamie q;o)

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/tomsk79/status/9702594268106752 Tomsk

    OBR confirms that HE funding changes will increase govt debt over lifetime of this parliament http://bit.ly/eU6Ocb

  • http://twitter.com/councillortudor/status/9711888032075776 Tudor Evans

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/brianfmoylan/status/9712019221512192 Brian Moylan

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/dkernohan/status/9712745653997568 David Kernohan

    @scottbw have you been reading Left Foot Forward today too? http://bit.ly/h2nYWy

  • http://twitter.com/hallymk1/status/9713165352833025 Richard Hall

    Double debt bombshell of Cable’s HE reforms http://bit.ly/h2nYWy via @dkernohan

  • http://twitter.com/andrewbradley/status/9723181115904000 Andrew Bradley

    RT @leftfootfwd: Cable's con as OBR shows HE reforms will increase both student debt and national debt http://bit.ly/eU6Ocb

  • http://twitter.com/cllrkrichards/status/9733139643498496 Kevin Richards

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL

  • Prof Colin Pritchard

    Take the 3 key Coalition `reforms’ together and “follow the money” (Morse). Health reforms will encourage further infiltration of the private sector as when you’re seriously ill, you’ll pay anyhting, so there are vast profits to be made, as in the US, from ill-health; reducing tenure in council housing will be a boon for private landlords at the crude end of the market and school and university reforms, will cost the more afluent taxpayer less as in any progressive tax system [which hardly defines that of the UK] the more affluent conribute to opportunities off the less affluent, which undermines the potential student from average backgrounds. In the nation has allowed the `robber barons’ to take over but sadly the likes of Blair, Hoon, Hodge, Mandelson etc have sold out to the multi-nationals, who already virtually `own’ the US congress.

  • Mr. Sensible

    Julian, true the previous government did set up the review. So what? Just because you set up a review, you don’t necesarily have to abide by all its reckomendations. And I think this government changed the context in which it was operating with its cuts to teaching budgets.

    I read in yesterday morning’s Guardian that a study in to the government’s proposals:
    “… claims that the changes – which will also see state funding for university teaching cut by 80% by 2014-15 – will leave taxpayers worse off because the government will have to borrow more to fund higher loans and pick up a bigger bill for debts that are written off after 30 years. Write-off costs are likely to rise from 27.5p in the pound to at least 36p, it estimates.”
    http://www.guardian.co.uk/education/2010/nov/30/tuition-fees-study-government-progressive?CMP=EMCGT_301110&

  • http://twitter.com/suukii/status/10252978099322880 Su White

    RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL

  • http://twitter.com/adamprocter/status/10257022599561216 Adam Procter

    RT @suukii: RT @leftfootfwd: Double debt bombshell of Cable's HE reforms http://bit.ly/fozLeL

  • http://www.beverleyandholderness.co.uk Judy Dickinson

    Can anyone tell me what the revenue per annum will be from the 50% tax on incomes over £150,000? How far would this go to finance the proposed level of £6,000 per annum student fee?

  • http://twitter.com/tomsk79/status/14016165646966784 Tomsk

    @DrEvanHarris I got it from @WilliamCB ( http://rsrch.co/eBjyK2 ) and @leftfootfwd ( http://bit.ly/eU6Ocb ) who in turn got it from HEPI/OBR