'If house prices were lower, student debt would not be so controversial', says architect of higher fees

David Willetts, Conservative party peer and former Universities Minister 
David Willetts, Conservative party peer and former Universities Minister  Credit:  Geoff Pugh

Lord Willetts, the architect behind the trebling of tuition fees, is no stranger to facing down fierce opposition.

But in recent months the former Universities Minister has unexpectedly found his landmark reforms to higher education at risk of unravelling.

With Jeremy Corbyn riding high on the hopes of a younger generation determined to see Labour dismantle tuition fees, Theresa May has been forced to revisit an area of Conservative policy that, until six months ago, seemed set in stone.

For Lord Willetts, now a Tory peer heading up a social mobility think tank, it is a chain of events which has prompted a degree of self-reflection. Speaking to The Sunday Telegraph he reveals that while he remains a committed advocate of tuition fees, he feels it is time to be “flexible” with the small print.

He believes that the interest applied to student debt – which is based on the Retail Price Index (RPI) plus 3 per cent and therefore currently stands at 6.1 per cent - must be lowered to prevent the system from going under.

David Willetts was speaking to the Sunday Telegraph ahead of the release of his new book 'A University Education' 
David Willetts was speaking to the Sunday Telegraph ahead of the release of his new book 'A University Education'  Credit:  Geoff Pugh

Speaking ahead of the release of his new book, A University Education, Lord Willetts admits that he never “envisaged” inflation would hit three per cent when devising the mechanism used to calculate the interest rate applied to student debt.

“The interest rate calculation was put in to reclaim more money from the more affluent graduates,” Lord Willetts says, sitting inside the headquarters of the Resolution Foundation, of which he is now chief executive. “But in my view, it is now the main pressure point.”

“We didn’t envisage that the RPI would be up at 3 per cent. [I would] now look at interest rates and at bringing back maintenance grants for the least affluent students.”

The Institute for Fiscal Studies has expressed concern that the “very high” rate is greater than that applied to mortgages and commercial loans, and will mean some graduates pay up to £40,000 in interest.

Research published last week by the Sutton Trust also revealed that with the average student now graduating with £50,000 of debt, 81 per cent of graduates will never pay back their loans if the repayment threshold is raised as planned.   

There has been mounting pressure on ministers to change the interest rate mechanism, which critics have dubbed a “stealth tax” because it is adjusted retrospectively.

As concerned as he is by Labour’s surge in the polls, Lord Willetts is apprehensive about proposals being floated by his own party. 

They include the plans to raise the salary threshold on which graduates begin making repayments from £21,000 to £25,000 and a review into whether to slash fees.

“My view is that we should not be following Corbyn,” he adds. “We should not be leaving universities under-funded through an expensive programme of relief for affluent graduates.

“Raising the threshold...would not have been a priority for me. It means that during their working lives less students will pay back what is owed. You can be infinitely flexible about the detail, what you cannot do is disrupt the system.”

“Because the biggest losers, if they go down that route [of cutting fees], will be students. We will be back to the days of rationing places at university, we’d soon find that the resource to pay for the education of the student was falling again, and meanwhile everyone else would lose out.”

One of Lord Willetts’s biggest frustrations has been the Government’s inability to counter Labour’s “absurd” spending pledges by directing public attention to the “real causes” of intergenerational unfairness: an acute housing shortage and stagnant wages.

“It’s a pity,” he says, adding that as an MP he did not deal with a “single surgery case” in which a graduate complained they could not afford their repayments.

“If we had housing costs the same as they were when I left university, if we didn’t have such a very high price for land in the south east, I don’t think the graduate repayment scheme would be courting anywhere near the amount of controversy it is today.

“I think it’s an emblematic issue. The real problem is that young people’s wages are no better than they were 10 years ago…and so young people’s living standards are far below those 20 years ago.

“The anxiety around [fees] only make sense when you see the much deeper societal pressures facing young people today.”

Urging his party to “stick to our guns”, Lord Willets adds that by adopting Labour’s policies, Mrs May would only serve to benefit “affluent graduates, who can afford to pay 9 per cent of their earnings”.

“I understand that you have to respond to political pressures. That’s part of the system. But what we must not do is throw the baby out with the bathwater.

“You could spend £1bn on higher education and have far more benefit. [What] Corbyn is proposing is to spend £10bn a year with no extra funding for universities, no extra money for low-income students.”

Lord Willetts remains a highly respected figure in higher education; he is a visiting fellow of King’s College London as well as Nuffield College, Oxford, and a board member of the IFS.

But his reputation for being an intellectual – he picked up the nickname “two brains” while serving in the Cabinet Office under Sir John Major – has not always played to his advantage within the Conservative Party.

Although his interest in big ideas drew him into David Cameron’s orbit, he has stated previously that other colleagues viewed him, unfairly, to “be out of touch with reality”.

Those tensions have not, however, done anything to dissuade him from pushing for further overarching reform of the education sector.

Two years on from leaving Government, his new book charts the rise of the modern university and is filled with bold ideas.

Like the current Universities Minister Jo Johnson, Lord Willetts believes that, for too long, universities have “been trading on a name” at the detriment of their students, who have failed to receive good quality teaching because their institutions are too “research intensive”.

He therefore supports the formation of the Office for Students, a powerful new university regulator which has created the “right incentive structure” to compel universities to deliver value for money.

However, he claims that the real shortcomings of British higher education stem from universities becoming clones of the country’s two most prestigious instructions, something he describes as the “Oxbridge model”.

He says that this narrow focus on traditional academia means that Britain has fallen behind its rivals in delivering “high-level, vocational, technical education.”

“It’s clearly brought its problems,” he continues, “because for 600 years we only had Oxford and Cambridge, because they were so ruthless in stopping the creation of other universities, we’ve ended up with one kind of idea of the university.”

“We have to breakthrough this hierarchy…to realise that actually, some of these universities have very distinctive specialisms and areas where they excel.”

Lord Willetts is calling for university league tables, which are “heavily influenced by prior attainment and research performance”, to be recalibrated.

This would involve giving more weighting to a university’s industry links and teaching quality, which would be “infinitely better” than criteria which “essentially compares universities to how they fair against Oxbridge”.

David Willetts speaking to the Sunday Telegraph 
David Willetts speaking to the Sunday Telegraph  Credit:  Geoff Pugh

He continues to champion mass participation in higher education as “fundamentally a good thing” and a “driver of social mobility”.  

But he is concerned that because of the competition for places at top institutions, universities have turned schools into “exam factories” which require pupils to specialise “too early”.

“A lot of my generation regard it as barbarism”, he adds, “because students are expected to define their career paths aged 16, when in most other countries that crucial decision would be made at the age of 20.

“Education is not a matter of gaming and scheming. You should be able to go to school without your teachers saying to you: ‘we’re going to do this subject today, because it’s worth this much in the exam.’”

He points to the US system, where the majority of students opt for an “undeclared” course before majoring in a specialism later.

This, he argues, means that students educated under “broader” systems have greater “resources to draw on” and are a more “dynamic”, versatile workforce.

Lord Willetts therefore proposes that AS Levels are dropped altogether, and replaced with a requirement to enter five A-levels. Mathematics would also be compulsory – a move which was previously floated by Michael Gove as Education Secretary.

The “onus”, however, remains on universities. It is a political expediency, Lord Willetts says, that British universities are focused on getting students “through the system quickly”.

He differs from Johnson, an advocate of accelerated two year agrees, and believes that universities should be pursuing four-year courses offered in the US and Scotland.  

“If you accept you’re going to do something more like the IB [International Baccalaureate] at secondary school and do 5 A-levels instead of three, then I think it follows that you’re much more likely to have four-year courses,” he adds.

“A lot of young people enjoy going to university, it’s a fantastic time in their lives. If they want to do it for four years, and as a result they emerge with a broader knowledge, that would be welcomed by me.”

A University Education is available to order now from Oxford University Press.

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