How to read HEFCE's funding letter from BIS

Vince Cable and David Willetts are trying to steer universities in a new direction. So the ministers at the Department of Business Innovation and Skills gave the Higher Education Funding Council for England unusually extensive and detailed guidance in the annual grant letter they sent at the end of December. What follows is the full text of that letter with annotations by me in red that are intended to explain, interpret and comment on what the government is doing.

Simon Hughes and Michael Heseltine - two men selling policies the Coalition doesn't have

The Guardian today splashes Simon Hughes across its front cover in his new role as an "advocate" for poor students' access to university. The Times splashes with Michael Heseltine's appointment as the government's new "growth czar". The two appointments demonstrate both the strengths and weaknesses of the Coalition.

On the one hand, the appointments shore up the two areas of greatest weakness in the Coalition. On access, Hughes unpaid appointment for six months is clearly a recognition that the Coalition's problems over fees are not over and that the build up to the coming white paper on higher education has the potential to inflict yet more damage - particularly on the Lib Dems. On growth, Heseltine's new job is an acknowledgement that the dribbles of policy seen so far have been hopelessly inadequate to justify David Cameron's claim that this will be "the most pro-growth government ever".

The appointments install effective communicators to sell the Coalition's benefits, and they've got off to a great start, placing the stories of their appointment in the right papers. In other words, the Coalition remains alert to political threats, dynamic in presenting its case and effective in managing the media throughout the 24 hour cycle - things Gordon Brown failed at.

Vince Cable is Wicked

 

They say the man in the hat has been doing bad things.

For something more serious, see Could colaition splits on growth prompt Cable to use his 'nuclear weapons'

Could Coalition splits on growth push Vince Cable to 'bring the government down'?

Could growth be the issue that pushes Vince Cable too far and prompts him - in the words printed in the Telegraph today - to "bring the government down"?

Yesterday we got budgets for eight other agencies that fund hi-tech research, but not one for the politically potent Technology Strategy Board. In other words, the concrete spending decisions that will encapsulate the coalition's policy are being put off.  A white paper on growth, first promised for the autumn, has been deferred at least twice and now languishes in the long grass. And Conservative and Lib Dem rhetoric on the issue is poles apart. All the signs are that the question of how to get the economy growing again is the most bitterly contested fault line in the Coalition.  

The delays seem to result from a triangular tug-of-war. In one corner we have Cable. Cable, for reasons that seem a bit clearer since he bared his soul in the Telegraph, often speaks in riddles. He tends to raise issues without committing to them - his dabbling with a graduate tax for students being a classic example. But what's pretty clear is that he believes there is a strong case for public spending to create growth.

In early June, he had warm words for post neo-classical endogenous growth theory, the school of economics favoured by Ed Balls and Gordon Brown. This, he said happily, was the foundation of his Department of Business Innovation and Skills.

Later that month he made a speech on finding growth while cutting the deficit. Here he argued: "But there are other areas where we do have to recognize that some forms of public investment are key to rising productivity and growth. One of the realities of globalisation is that the UK cannot compete internationally without high levels of private and public investment in sophisticated skills, knowledge, technology and innovation." These words could have come staright from Labour's lexicon.

Indeed, in some respects he has gone further than Labour, treading into the politically treacherous territory of picking winners. "The debate about industrial policy always raises the spectre of ‘picking winners’," he said. "But in a globalised economy its time to move this debate on a bit – be clear about what this means. Because in some ways we have to be picking winners."

In a second corner is George Osborne. When he talks about post neo-classical endogenous growth theory, it is only to trash the concept as one of the foundations of Britain's crippling deficit. Here's what he thinks the government needs to do:

"We can work with the private sector to identify the impediments to growth. We can do this by asking ourselves how to go about:

• Providing macroeconomic stability;
• Removing uncertainty from the tax system and making business taxes more competitive;
• Ensuring the banking system works for the good of the whole economy;
• Enabling product markets to work efficiently;
• Improving the planning system and the housing market;
• And supporting the most economically productive investment."

Spending by the government creeps in there, arguably, at the tail of a long list.

Between these two, we have an argument over economic philosophy. How serious is it? Conservatives sometimes pat themselves on the back for their brilliance in tricking Cable into taking on the department with the tuition fees bomb in its hands. But the downside of handing BIS to Cable is that they have installed a professional economist in a department that can seriously fight with the Treasury over economic policy. And one who, appraently, believes he has political "nuclear weapons" at his disposal.

But growth is not only an economic issue for the Coalition. It's also a political issue. As unemployment rises and salaries stagnate, it needs to convince the public that it has a credible plan for getting the economy growing again. This puts David Cameron in a third corner. He doesn't have to care what economic policy Osborne and Cable come up with. He does need a good story to tell the voters. In October, he promised, "you’re going to see the most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government", but his big speech subsequently failed to provide the substance to back up the vaulting claim. He won't get away with such shallowness again.

At the moment, we have a stand off. The growth white paper is in limbo. The budget and four-year strategy of the Technology Strategy Board, accepted now by Conservatives such as David Willetts as the vehicle for investing in hi-tech growth, remain unpublished. "Sometime early in the New Year" is the current timing. Plans for a new network of Technology and Innovation Centres, due in December, remain unfinished and are now promised for the first half of January. These hi-tech investments of course are not crucial to actually creating jobs before the next election. But they have a symbolic value that makes them crucial to the Coalition's political destiny. And for those of us outside the loop, all the delays suggest substantive disagreements at the political level.

[Update 26 January 2011 - On 12 January, Willetts told MPs: "We hope to publish in the next few weeks a grant letter for the TSB." That sounds like March probably, which is just days before the financial year begins - obviously way, way late. In effect, it looks as though the TSB's budget has been dragged into the grand negotiations over the March Budget for the entire country. The indecision is final.]

Is Cable going to see any of this as an issue worth resigning over and triggering the "nuclear" walk out of the Lib Dem left that would destroy Nick Clegg and the Coalition? Only if the other politicians in the game get it very, very wrong.

An exceptional explanation from Vince Cable on tuition fees

"Exceptional" has been the word. Vince Cable and David Willetts have used it over and over again to describe the circumstances in which universities will be allowed to charge over £6,000 a year in tuition fees.

For example, in the crunch debate in the House of Commons last Thursday, Cable said, "... That involves the introduction of a fee cap of £6,000, rising to £9,000 in exceptional circumstances."

But what does "exceptional" really mean? Simon Hughes asked Cable this in the debate, and got this reply:

"That is a highly pertinent question in the light of the experience of the last Government, who had a two-tier system. There was a migration of all universities to the top of the range. They operated, in effect, like a cartel, and that must be stopped. It must not happen again, and there are several means by which that will happen. First, any university that wants to go beyond £6,000 will have to satisfy very demanding tests of access for low-income families, including through the introduction of the scholarship scheme. Newer institutions, particularly further education colleges providing accredited courses, will drive down the cost of high quality basic teaching. If universities defy the principle of operating on a competitive cost basis, it may well be necessary to introduce additional measures to observe the principle that my hon. Friend has correctly summarised, which is that-

[Interruption]

I am simply saying that there are potentially other mechanisms by which universities that exceed the £6,000 level will not be allowed to behave in the way that they behaved under the last Government."

That gives a kind of an answer to how the government will enforce the exceptionalism. What it doesn't do is to tell us what we should understand by "exceptional". The word itself seems to me to suggest that maybe 10 per cent at the most would be allowed to go to £9,000, but most people in universities are assuming many more universities will be allowed past the £6,000 cap.

Fortunately, the government has produced a draft "explanatory memorandum" that sets out how the statutory instrument that Parliament has now approved should be interpreted. This is important because it moves us out of the realm of rhetoric and into the realm of legislative force. And paragraph 7.7 explains what the government intends on this:

"We are also proposing to allow some universities to charge above £6,000 and up to £9,000 (or above £3,000 and up to £4,500 where a shorter tuition period in the circumstances set out in paragraph 7.6 above). The Higher Amount Regulations which are annexed to this memorandum, give effect to these higher limits. HEIs that wish to charge above £6,000 and up to £9,000 in tuition charges will be required to draw up an access agreement with OFFA, whose role is defined in the Act."

You will note that there is no mention of the word "exceptional" there (or elsewhere in the memo). Instead, we are told simply that "some" universities will be allowed to charge over £6,000.

Cable and Willetts can still make good on their exceptional promise in the coming white paper on higher education. But the explanatory memorandum suggests the government is already half way to abandoning it. Look out in the New Year for any sightings of the word. If not, you may want to conclude that another pledge is in the process of being broken.

Sunday lunch round up on tuition fees

News

Seven Lib Dem MPs have written to Nick Clegg, begging him to defer this week's vote, reports the Mail on Sunday.

Vince Cable's team, presumably fed up with their man getting kicked around in the media, seem to have been talking to Melissa Kite in the Sunday Telegraph. All that flip-flopping wasn't Cable's fault, we learn. No, she reports that Clegg phoned Cable last week "in a panic". "We've got to abstain," he pleaded, apparantly.

The Sunday Mirror reports how the £150m scholarship fiund is to be used. "Under his plan, about one in 20 of the 400,000 who go to university each year would be exempt from tuition fees for one year. About 80,000 students - who were eligible for free school meals in their secondary schools - a year would fight for just 18,000 places on the National Scholarship Programme."

David Allen, a Lib Dem activist who seems to be a bit of a thorn in Clegg's side, has called for backbench Lib Dems to defeat the rise in fees.

Comment

Two gorgeously unreflective bits of self-interested tea and sympathy for Clegg from the heart of Conservatism. Fraser Nelson in the Spectator says, "I have yet to speak to a Tory minister that dislikes Clegg, or their Lib Dem colleagues. But most reckon that Clegg is doomed." The Sunday Telegraph's leader writers say, "True, the party is spooked by its plunging poll ratings – yet it will only recover if Mr Clegg rediscovers the virtue of courage, and sticks to his chosen course. If he does not, he will cement his party’s position as an object of the voters’ contempt."

The Independent on Sunday has come out against a tuition fees rise on the grounds that it will deter poor students, and has a long interview with Clegg (full transcript here).

Andrew Rawnsley in the Observer thinks the rebellion is mangeable but sees Clegg transformed into a hate figure and argues, "What this week's vote will crystallise is the irreversible change in the reputation of the Lib Dem leader."

John Rentoul in the Independent on Sunday argues, "Thus the stage is set for the final frames of the slow-motion car crash that has been running since before the election, in which the dummy finally smashes through the windscreen."

Mary Beard on the dliemma about supporting the student sit-in in Cambridge.

The Observer has a confused editorial about the Lib Dems' confusions.

George Parker, the FT's political editor, says, "Slowly, but inexorably, the Conservatives and Liberal Democrats are being bound closer together in government." And goes on to quote Manchester professor Colin Talbot arguing, “If they go ahead with a 2014 spending review they will be, in essence, writing a joint manifesto for the general election due in May 2015."

And I forget where but someone said the Tuesday meeting of Lib Dem MPs might be delayed until Wednesday.

Tuition fees playbook - the key events and decisions in the next five days

It’s what we don’t know about what’s going to happen in the next five days before the crunch vote on tuition fees that is most telling.

What we do know is this. MPs will return from their constituencies on Monday. On Tuesday there will be another meeting of Liberal Democrat MPs to try and thrash out an agreement. On Wednesday, the students will again be demonstrating and thus pushing the story onto the front pages again, there will be Prime Minsters Questions and the Institute of Fiscal Studies will release its analysis of the government’s plans. In the evening, a Lib Dem will have to tackle Question Time on the BBC. On Thursday there will be more demonstrations and the vote.

The one big thing not on that list is the written document filling out the government’s plans that Vince Cable promised last week. That will be crucial for three reasons. It will be an opportunity for the government to make its case afresh. It will set out additional detail that will allow everyone to make a better assessment of the plans. And it is the most obvious opportunity for the government to make concessions to the rebels.

If things continue as they have, then ministers will spend most of their time in secret meetings in Westminster, not in TV studios or other forms of public debate.

Now to what we don’t know. What is the problem?

For the past week the Lib Dems have been in melt down. But over what? Every time anyone sits down to count the number of rebel MPs they come up with around 13. If that is what we are talking about, why the agonising? Nick Clegg could just say, I’m whipping the party to abstain, as provided for the in the Coalition Agreement and hence ratified by both our Conservative colleagues and the Lib Dem party as a whole. The four Cabinet ministers will vote for the policy because anything else looks stupid. Some backbenchers will rebel, but hey, that’s what happens when you’re in government.

How much better that would be than the huge mess of the past week - still ongoing. It would be clear and decisive. Some would accuse him of selling out, but they are anyway.

The reality must be that Clegg has a much bigger problem on his hands. Superficially the dispute is signalled by Cable continuing to talk of collective abstention even while Charles Kennedy and others are repeating that they will go through the Noe lobby. But I believe there’s something deeper. And the Lib Dems are telling the papers they don’t expect to have it solved by the time the Tuesday meeting finishes. In other words, it looks like this is going to go right to the wire.

And we know that the solution is out of Clegg’s hands. Several senior Lib Dems have made it clear that this is something the party is sorting out collectively. Cable went so far as to say that’s how Labour and the Conservatives do things. But it’s not. Yes, in those parties the leadership has meetings with backbenchers. But it never puts itself in a position where it stops leading because of that.

What is the underlying dispute? I don’t think it can be simply MPs squabbling over who is allowed to remain among the canon of Lib Dem saints by going through the Noe lobby in a managed rebellion, though that must be part of it. Substantively, I think the evidence points at the problem being the obvious, a demand for a more progressive policy that is more in line with the party’s longstanding position.

Both Kennedy and Menzies Campbell have said they will vote against a rise in fees. Having signed the NUS pledge, they say they think this is the right thing to do. In public, they have eschewed the opportunity to make this more than a personal stand. But what if they see this also in party political terms? In that case, they long ago came to a conclusion that is now widely accepted, that by failing to deal adequately with the tuition fees problem the Coalition Agreement contained a big strategic error by Clegg that would destroy trust in the party.

In that case, what Kennedy and Campbell really want at this point is a renegotiation of the Coalition Agreement, with potentially big consequences. There is a Scottish example of Lib Dems joining a coalition but not in the fully-engaged way that Clegg has joined Cameron. In Edinburgh, they went without ministerial posts in order to deliver on tuition fees for their voters. That was the deal, and if Westminster ended up with something similar than politics in this country would be very different in the coming years.

Simon Hughes in his Newsnight grilling a couple of months back also failed to accept that the party's MPs would end up betraying their pledge on fees. Tim Farron has promised to vote Noe. So when you look at senior Lib Dems - every one of them who is not in the government - you find people who are not reconciled to the U-turn on tuition fees.

But we don’t know what they are holding out for. We don’t know what they are threatening Clegg with. We don’t know how humiliating a U-turn it would take to satisy them. We don't know what the silence of Chris Huhne, Clegg's rival in the leadership contest, signifies. And we don’t know how ready David Cameron is to help.

It’s possible that even the players themselves won’t know the answers to these questions until we get to the debate on Thursday night. Hold on to your hat. We're off for a ride through the rapids of brinksmanship.

Vince U-turn on U-turn on Uni U-turn U-turn

Read this http://bit.ly/fh5oFq. Then this http://bit.ly/f9PwgN.

And while you're enjoying ironies, consider the fact that Barnaby Raine, the 15-year old voice of the student ultras, is now the number one reason for new visitors to Vince Cable's Lib Dem Voice website.

The 10 failures of Nick Clegg on tuition fees

The government’s decision yesterday to call the crunch vote on tuition fees on the earliest possible date – next Thursday – is no surprise. For as of Tuesday it is clear that the media have turned on Nick Clegg, Vince Cable and the Liberal Democrat party over tuition fees. The narrative of betrayal has taken hold and the yellow lot are getting the biggest kicking of their political lives.

If this is erosion of trust, then we have reached the point where the cliff is sliding into the sea. The reputation of the party, its leaders and most of its MPs is plumbing new depths. The party is at 10 per cent in the polls. The brand is being trashed.

Nonetheless, Clegg and Cable may still be making some progress towards what has been their prime objective on fees - securing the passage of the legislation in a crunch vote later this month in order to keep the Coalition together.

Their problem is that the damage now being inflicted daily on the Lib Dems starts to change the calculations of everyone from Clegg to backbench MPs to party members. It intensifies doubts about Clegg’s ability to provide David Cameron with the abstentions he needs to win the vote. And, even if Clegg can manage to deliver enough of his MPs, the battering raises the question of whether the victory will prove to be pyrrhic.

How has it come to this? They key is the National Union of Students’ pledge signed by all the Lib Dem MPs - or rather, how Clegg has handled it.

Another gaffe by Cable as he again struggles to master his brief

He always sounds so reasonable, like your favourite if slightly patronising professor. And he has this glow of intelligence in his reputation from his time as BP's chief economist. So if you're like me, you will naturally be inclined to trust Vince Cable on almost anything. But, hard as it may be to credit, it appears that Cable doesn't actually understand the policy he is selling on student fees.

Here's the exchange on 5 Live this morning on the question of whether that figure of £21,000, the threshold at which graduates start paying back their loans, is £21,000 in 2012 or 2016. This makes a big difference to the finances both of students and the government. For if it's 2016 money, then that's equivalent to about £17,600 in 2012 money and about £16,100 in today's money (if you take the government's assumption that earnings will rise at 4.5 per cent a year).

In other words, if it is 2016 money, then most graduates will start paying as soon as they get their first proper job. If it's 2012 money, then it might be the second job before they start paying.

The Browne Review set the threshold in 2012 prices, but suspicions have been gathering that the government has quietly shifted the goalposts by changing it to 2016 prices. And the BBC wanted to get to the bottom of it.

Victoria Derbyshire: "Is that 2012 prices or 2016 prices?"

Vince Cable: "No, that's at current prices."

Repeat: that's not even 2012 prices, according to Cable it's 2010 prices.

And it gets worse. He goes on like this:

Vince Cable: "We could conduct the conversation if you like in 2016 prices, but then we'd also have to talk about the cap on fees in 2016 prices."

So he's not only convinced the £21,000 is not in 2016 prices, he actually thinks it would be misleading to use 2016 prices. (He's right of course. As any economist will tell you, it is misleading).

Well, I know Cable's got form on mixing his numbers up so I checked with his department. Here's their po faced reply:

"The repayment threshold will be £21,000, based on 2016 prices.  We anticipate reviewing the threshold around [my italics] every 5 years to reflect earnings."

In other words, his party's in meltdown and yet Cable simply cannot master his brief.

But that's no surprise to scientists because in the summer, he caused a storm when he blundered over another set of figures and managed to tell scientists (wrongly) that 45 per cent of their work was poor.

[Note: The exchange on 5 Live starts about 17 minutes in]