On the day the coalition was formed, Michael Gove entered Downing Street with his consigliere Dominic Cummings. Only one of them left with a job.
It was one of the clearest demonstrations of Andy Coulson’s power. On Coulson’s advice, David Cameron offered Gove the position of education secretary on the condition that he sacked Cummings. Gove did not take it well.
Has Michael Gove’s discreet approach to budget negotiations paid off? Education bravely resisted the shroud waving that marked the defence review. But it looks like Gove has emerged with a better deal than Fox, at least in terms of his resource budget.
We already know that schools spending — based on the Ed Balls baseline — will rise in real terms (albeit by a tiny amount). Today’s surprise will be that the education department will win the best settlement of all the unprotected departments. That means its resource budget will be cut by less than the 7.5 per cent imposed on defence. When it came to a stand-off between kids and frigates, the kids appear to have prevailed.
Now, as with all settlements announced today, the headline figure mask a great deal of pain. Spending channelled through local authorities (such as children’s services) will suffer. So will spending on 16 to 19 year olds. And of course the resource settlement does not include the education capital budget, which is about to be thumped.
Ed Miliband loves the idea. Some of the coalition are even toying with the policy. Here are four reasons why the Treasury should ignore them.
1. The dead hand of state control
A graduate tax will kill any sense of a market in university degrees, as all funding will be centralised. Bureaucrats will divvy up the cash for the university courses they judge to be worthy. Instead of following the informed decisions of students, the money will follow the whims of Whitehall. This tax “reform” would effectively run universities like the Further Education sector. Brilliant.
Now this is odd. Since George Osborne and his axemen entered the Treasury, far from cutting the school building programme, they’ve actually allowed it to swell.
Around £1.5bn of additional contracts have been signed since May, a billion of which came in the last 21 days. Given departments are facing average cuts of 25 per cent, you have to wonder what on earth is going on.
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.
Willetts is, understandably, still skirting around the issue. But the declaration of intent to bring down the cost to the taxpayer is clear:
“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.
At the moment the government offers terms that are beyond generous.