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Put aside the talk of a rise in student fees. The most important hint given by David Willetts today is that soft student loans, subsidised by the state, will have to be reformed. He’s raising the axe over a indirect giveaway to the middle-classes worth around £1.2bn a year.
“What I want is something that does indeed reduce the burden on the taxpayer but it also has to strengthen the finances of universities in the long term, some of which are in a very fragile state because of the mess that Labour left behind,” he said.
Just consider what would happen if student fees were raised without tackling the student loans. Without stopping the perk, the state could end up spending even more on higher education, not less, in order to subsidise bigger loans. For Willetts to meet his goal of easing the burden on the taxpayer, the interest rates on loans must rise.