Daily Archives: October 11, 2010

Jim Pickard

One of the perverse consequences of the Browne higher education reforms – if the leaks are correct – is that payments may land hardest on graduates who end up with middling incomes.

Why? Because students from the wealthiest families are likely to pay back their loans quite quickly. And that means that they will pay less interest (loans will no longer be interest-free) than their less affluent friends. The point was made by Alex in an article a few weeks ago:

This is because real interest rates will mean middle-income graduates take longer to pay off their loans – meaning they ultimately pay more than those in high-income jobs. “Raising the fee cap isn’t nearly as regressive as the cutting of subsidies it may imply,” said Iain Mulheirn of the Social Market Foundation.

You can actually do the maths yourself. The assumptions used in the Browne review (when it discusses the distributional implications of the proposals) are a tuition fee of £6,250 – meaning a possible overall debt of £30,000 if you assume £3,750 of maintenance loans. 

Jim Pickard

The referendum on voting reform will take place on May 5 next summer after the Tory whips reined in scores of MPs who had threatened to vote for a delay to the poll. The plebiscite will now occur on the same day as the Holyrood, Welsh Assembly and English local elections, despite some concerns that voters may be left confused.

The Liberal Democrats will be campaigning hard for a “yes” vote, despite the proposed “alternative vote” falling far short of their preferred electoral reform to a full proportional representation (PR) system. Most Tories are set to oppose the change while senior Labour figures – while voting for a “yes” – may not actively campaign one way or another.

Bernard Jenkin, a leading Tory backbencher, had hoped for as many as 50 Tory MPs to support his amendment proposing that the referendum should be moved back to September next year. An early day motion by the MP had attracted 44 signatures from within his own party, holding out the possibility of a Parliamentary defeat for the government if Labour had also backed the amendment. 

Jim Pickard

The report by Sir Philip Green into Whitehall efficiency is now out* and it makes interesting reading, not least his suggestion that maybe the state shouldn’t be paying for mobile phones for desk-bound junior personnel. (There are 105,000 government mobiles).

One of his discoveries is the lack of reliable central government data. For example, his team was first told that Whitehall spent £2bn a year on travel. The second estimate was £500m. The third was £768m – before the final figure came in at £551m. (This will seem familiar to all political journalists).

Sir Philip has also found big differences in prices paid to suppliers: a box of paper can cost anything from £8 to £73. Laptops vary from £353 to £2,000. 

Jim Pickard

The crunch time is looming for government capital projects with all departments fighting for a shrunken fiscal pie. (Labour had already earmarked cuts in net investment from £49bn last year to £21bn this year).

Philip Hammond has been fighting the case for his department on the basis that big transport schemes can have a net economic benefit to UK GDP – more so than libraries, schools and hospitals.

But for Hammond to save his biggest priorities, such as the London Crossrail scheme – and parts of the Thameslink upgrade – he may have to abandon several big ticket items of capital spending. Don’t be surprised to see the scrapping of a] The £7.5bn order for new Hitachi Inter-city Express trains, b] about a thousand new carrriages for other lines including Thameslink and c] countless upgrades of A-roads across the country. This is aside from the pressures on his revenue spending, where fares may have to go up by 10 per cent or a similar figure in the New Year