Great news on tuition fees

Yesterday evening I watched an event hosted by CentreForum, the Centre for Social Justice, the Fabians and the Child Poverty Action group, on the broad subject of What to do about Poverty after the Crunch.

The speakers were all very knowledgeable and poised. All of their views, in isolation, made sense.

Kate Green of CPAG points out that people can be in work and in poverty, so don’t rely on work.  And excluding the middle class from benefits through means-testing means that those powerful people won’t fight for the disadvantaged. She was ‘dismayed’ by hearing about the Lib Dems stopping child benefit from being universal.

Steve Webb MP spoke movingly about the difficulties of the tax credit system, and explained the ineradicable trade-off between high benefits at the low-end and low marginal taxes.  They have to be withdrawn eventually, you see . . .

Questions from the audience all, again, illustrated a high degree of knowledge about specific problems that would occur if any money was withdrawn.  The CSJ suggestion of simplifying benefits from 52 types to 2 was warned against by Steve, who pointed out how many the losers would be.

All of this was quite fine and moving, in its way.  It also went nowhere near facing the ‘hard choices’ that were needed to make ANY of it happen.  If you were to extract ‘pledges’ from the panel, they would have been:

- increase out of work benefits, to help prevent poverty

- but also increase in-work benefits, to retain a reason to work

- and don’t reduce them for the rich, either, in case you get a two-tier classed society.

How much does that lot add up to?  £10bn?  In the meantime, in the 12 months since this agenda was last pushed in a broadly identical shape, the fiscal situation in 2012 has gone from 550bn debt to 900bn debt, and a 20bn deficit to a 120bn deficit.   But, for all that you would guess from this event, this made no difference.  “My agenda matters – there are real people involved – don’t backtrack”.  No hard choices made, at all.  They are all for someone else to pay for.

Unfortunately, the incomes of the very rich are about £250bn, with £80bn already paid in taxes.  You might struggle to get another £5bn from them.

Just another £100bn to go …

This is why the news that Nick Clegg has admitted the inevitable on tuition fees is doubly welcome.  As our pamphlet shows, this is a bad policy, full stop, regardless of the fiscal situation.  In the current budgetary condition, it truly sucks.

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5 thoughts on “Great news on tuition fees

  1. A Post Card To Bournemouth:
    Giles,
    Enjoying reading your posts from Bournemouth. Feel for you having to put up with fringe events like the one you describe above.
    Particularly interested to see Friedman and Swartz’s chapter on The Great Contraction on your reading list.
    Shouldn’t Vince Cable have written “Tackling the Monetary Crisis 08 – 11” before attempting “Tackling the Fiscal Crisis”?
    Best wishes
    Bill

  2. Bill

    What an interesting comment – I’m glad someone picked up on that.

    Yes, I am hoping to write a bit about monetary stuff – QE, to be precise.
    But have yet to reach my conclusions: I don’t have hardline Austrian views on how the crisis reflected mal-investment, nor do I believe
    that just by pushing harder on the monetary M1 we can somehow solve the demand drop.

    I actually enjoyed the CPAG/CSJ event – I have to speak at the equivalent with the Tories, so it was good prep.

    I met you briefly at a Ravenscourt hustings 2 years ago. Hope to see you around – more blogging later.

    • Giles
      Thanks for this reply. I do hope you get time to look at the money side. Someone needs to urgently. I don’t have enough knowledge myself.
      Leaving aside the value of political positioning, surely the timing of the application of any fiscal break is the crucial issue. And the most important speedo to watch is the money supply. After all, Keynes was a monitarist.
      I was brought up on the IMF/Friedman inspired equation linking changes in PSBR to changes in money supply. Then of course it was all about increases, increases, increases, but now I worry about the effects of decreases on the money supply.
      Again my technical knowledge is not sufficient but the QE seems to have gone to banks and not through them into investment spending. As you suggest, pushing on M1 or even M4 could be like pushing on a piece of string. At this stage of the cycle demand is more easily stimulated through Gov Exp and if that’s capital spending so much the better. And we have lost a year doing this in a half-hearted manner.
      So, you will understand that from my limited grasp I don’t buy the need to reduce PSBR now only the need to re-administer Gov Exp radically towards investment.
      That is my reasoning for suggesting that now a great chance to Rebuild Britain, physically and culturally. Culturally because, expressed as a Great Mission, it could change what people expect Government to do and what Government does as well as changing our fortunes for the better.
      And, as politics, it would a great campaign and a lot of fun.
      B

  3. [...] Giles Wilkes came to work for Vince Cable after building up a career at the liberal thinktank Centre Forum, where he rose to become chief economist. It was there that Wilkes kept a personal blog called the Freethinking Economist – subtitled: “A voice of reason against illiberal nonsense” – where he outed himself as a Lib Dem, reserving the right to disagree with the party on some issues, notably their pledge to scrap tuition fees. [...]

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