It is rare for a policy announced by the Opposition to destabilise the Government. But it can happen. In 2007, George Osborne’s pledge to raise the inheritance tax threshold to £1m deterred the new Prime Minister Gordon Brown from calling a snap general election which Labour would almost certainly have won.
Today the Government is still in a pickle over Jeremy Corbyn’s landmark pledge at last June’s election to scrap university tuition fees. The reverberations have cost the two ministers in charge of the policy their jobs. Justine Greening, the Education Secretary, and Jo Johnson, the universities minister, were shunted out of the Department for Education in last month’s reshuffle after being accused of blocking a review of fees.
That is now going ahead under Damian Hinds, the new Education Secretary, and Sam Gyimah, the universities minister. Although Greening opposed a “long grass” review that would take forever, government insiders tell me that Theresa May wants results in a few months. Education and housing are two of the main areas in which exasperated Conservative MPs are demanding radical action from May to show there is more to life than Brexit.
The review’s options include cutting the £9,250-a-year maximum fee, perhaps to £7,500; reducing the interest rate on loans (currently almost 6 per cent) and for universities to charge variable fees for different courses to stop the maximum being the norm (which critics say would mean a two-tier system, with poorer students opting for cheaper courses). Last October, May rushed out a welcome rise in the salary threshold at which graduates start to repay their loans from £21,000 to £25,000 and froze fees at £9,250. But she got little credit for it. Ministers admit further reforms are needed; the system is a mess. The Institute for Fiscal Studies put the cost of the threshold change at £2.3bn a year, saying it would result in 83 per cent of graduates not paying off their full loan. So taxpayers will pick up more of the tab for the half of the population which benefits from a university education, undermining the whole point of fees. But graduates have a cloud of debt hanging over them – now about £50,000 in England, the highest in the world – and face high marginal tax rates once they earn more than the threshold. Even worse, students from the poorest families have the biggest debts.
Since becoming universities minister, Gyimah has embarked on a programme of visits which has been compared to Tony Blair’s “masochism strategy” of meeting voters angry about the Iraq War. Giymah tells undergraduates he wants to be minister for students as much as for universities. Given the popularity of Corbyn’s pledge, and opposition to “Tory austerity” and Brexit among young people, he is not exactly Mr Popular.
In fact, Gyimah, 41, was a good appointment in a messy reshuffle. He was brought up in Ghana by a single mother after his parents split up. He made it to Oxford University, and became president of the union, but ran out of money and had to plead with Oxford to defer his rent until after he graduated.
Interestingly, the strong message he has got from students so far is not anxiety about future debt but their day-to-day living costs now. “As I speak to students I can feel that pain,” he told the BBC. “It is something that as politicians we should be alive to ... In politics, a lot of the debate is around fees. You have to look beyond fees, and at living costs.”
The logic of his comments would point to the Government reversing its decision to scrap maintenance grants in England – at the very least, for the poorest students. They were replaced by loans from 2016-17; students from more disadvantaged backgrounds now end up in more debt than their better-off peers.
Greening wanted to restore maintenance grants but was blocked. So Gyimah and his boss Hinds might have to fight hard to persuade Downing Street and the Treasury. Bringing back grants for all would cost about £500m.
True, Labour is committed to restoring them. Some Tories argue they should not waste their time on student funding because Labour will always outbid them, and so they are merely publicising their opponent’s keynote policy to scrap fees. The Tories know they will not win the argument by describing Labour’s pledge as a £10bn bung to the middle classes. It is a very popular bung.
Restoring maintenance grants would be right, fair and would boost social mobility. It is something the Tories could do now; Labour’s plan might have to wait until after a 2022 election. It would be noticed by the under-45s who deserted the Tories last June. It would not trump Labour, but would at least get the Tories back into the domestic political game. They cannot afford to vacate the pitch.