In his Spending Review yesterday, George Osborne announced a 40% cut in the teaching budget for universities. This is part of the coalition’s plan to tackle the UK’s historical deficit. Universities now have no other option than increase tuition fees in order to fill the new gap in funding. This will be possible if Browne plan is implemented. Essentially, the implementation of this proposal will create a free market for higher education in the UK, very similar to what already exists in the US. However, this also signals the end to a great education system that used to be free and available to everyone. So, what do we take from this?
The cost of teaching a degree is estimated to be around £7,000. Under the current system, universities are allowed to charge students up to £3,290, which most of them do. The remaining cost is then subsidised by the government. If the cap on tuition fees is removed, we can expect most elite universities to raise their fees without facing a decrease in demand for places (demand for places at big universities is indeed very inelastic). This will enable them to invest more in researches and compete with big American universities.
However, there is also a downside to this. Firstly, creating a market place for higher education will benefit only a certain group of universities. As in any other competitive market, smaller and less prestigious universities will struggle to compete and shut down eventually. This will increase unemployment level in the public sector (not every lecturer can go and work for a private company), which in turn will have a wider adverse effect on our newly recovered economy. Furthermore, bright students from poor families will no longer be able to go to places like Oxford or Cambridge simply because they cannot afford them.
In the end, higher education is a public good that will always be under provided in a market system. This is why government provision of education is so vital. However, a market for higher education now means it is money that gets you into the best universities, not your real academic potential.
Please comment below to let us know what you think.
Nowadays, environment and sustainability is on everyone’s mind. The idea of not having clean water to drink or clean air to breathe is terrifying, yet we are not doing enough to make significant changes. Governments of the world are still fighting with each other instead of working together on the issue. Perhaps it is time we took the matter in our hands and started acting. Luckily, there is an organisation dedicated to this cause.
Oikos is an international student organisation for sustainable economics and management. They have local chapters located at universities in Europe and beyond, counting more than 50’000 students of Economics and Management. In addition Oikos is working with PhD Students and Faculty from across the globe and welcomes a growing Alumni community.
Visit their website to find out how you can get involved.
Sheila C. Bair, who chairs the US Federal Deposit Insurance Corporation (FDIC), has another string to her bow: she’s the author of Isabel’s car wash, a children’s book in which little Isabel borrows money and washes cars so she can buy a doll.
It’s not every day you see a children’s book taken apart for its assumptions about consumer behaviour and the private sector, but that’s just what reviewer Glenn Fleishman does, with tongue somewhat in cheek. Fleishman seems exasperated that plenty of adults’ understanding of money and markets is no more sophisticated than Isabel’s Car Wash, and that some of those adults have responsible jobs.
If there is anyone who should know, it’s Andrew Bailey, because if you look at the bank notes in your pockets and wallets, his signature will be on all of them. Robert Peston, the BBC ‘s business editor, went to the Bank of England to chat to the man who makes the money we use. He examines how we got into the recent financial crisis and what you can do to protect yourself.
