Earlier this week the Adam Smith Institute published their paper entitled "Global Player or Subsidy Junkie: Decision Time for the BBC". In it, they describe the current model for broadcast regulation as 'exhausted' and argue for the abolition of the current licence fee to be replaced by a voluntary subscription.
I have been debating with a fellow blogger the merits of the BBC and the existing funding mechanism. As I argued, the BBC seems to have morphed massively beyond its original remit and now resembles a commercial broadcaster, albeit with none of the challenges of competition for advertising revenue. It is difficult to see the public service benefit of the increasing number of gameshows, reality TV shows, or the increasingly ubiquitous Eastenders. Or as the Adam Smith report puts it, "the BBC is, in reality, a subsidised entertainment firm with some non-commercial obligations."
This is undoubtedly harsh. There are some genuinely excellent programmes produced by the BBC. They have a good record of producing costume dramas, sitcoms, and nature programmes in particular. They also produce leading documentaries - of which Nick Robinson's Five Days that Changed Britain broadcast last week is the most recent example - while they also have a clear public service remit to broadcast live the debates in the House of Commons on BBC Parliament.
Some of these programmes simply would not be produced were it not for a public service remit. Nevertheless, I am increasingly convinced that some, perhaps many of the BBC's drama and mass entertainment productions would be better off being produced in a commercial setting. Great they may be, but the BBC is not the only broadcaster that could produce such programmes. The BBC's entertainment remit is a holdover from the times when the broadcaster was the only show in town. There is simply no need for a publicly funded broadcaster to be making such programmes in the multi-channel, multi-media environment of the twenty-first century. It represents an anachronism.
Accordingly, I am of the view that the BBC must be split between commercial activities and a public service remit. The public service remit must be much smaller than it is now and cover those activities which would not be possible in a commercial environment such as e.g. BBC Parliament, aspects of Radio 4 and BBC News and Weather among others. It could also cover programmes which have a clear educational benefit and contribute to society as a whole, but again which would be cost prohibitive in a commercial context. Such programming would include wildlife documentaries, adaptations of important works of fiction - costume dramas etc. (although this is of course a fine line to tread). It would not, however, cover commercial programmes such as sitcoms, soaps, and much of the coverage on BBC Radio, all of which can and are already produced in a commercial environment.
If the BBC wishes to continue with some form of public subsidy such as the licence fee, albeit at a much reduced rate, then it must rationalise its activities into commercial and public service activities. If people want to continue to watch commercial programming then they can subscribe to them. The BBC's public service remit must be restricted to programming that only a public service broadcaster can offer. In many instances, this is already what the BBC does best. It has just been buried.
Tuesday, 3 August 2010
Monday, 2 August 2010
Graduate Tax - the NUS Fightback
I note that the NUS have released today their response to what they are calling "a whole host of distortions" regarding a proposed Graduate Tax. They have set out to debunk 'six myths' on this subject. Let's look at them!
1. Most graduates would pay much more than they do now
The NUS argue that it is only those who really benefit who will pay more. Earners in the bottom two 'quintiles' would pay under or about half the current amount, while those in the middle quintile will repay approximately the same. Meanwhile, under their proposal there would be a 25 year upper limit under which the tax is payable as well as a cap on the maximum amount to be repaid to ensure 'fairness'.
I guess that 2/5 does not amount to 'most' so assuming the NUS figures are correct the myth is not substantiated. Neverthless it is hard to see what is fair about a tax that bears no relation whatsoever to actual costs and sets out, by the NUS's own admission, to ensure higher earners contribute considerably more. It is nothing more than an extra tax on income. This is apparently 'progressive'!
2. The money would go to the state
To avoid money going into the Treasury, the NUS solution would be to set up a Trust (is that a Quango by another name?) to collect the money and to be controlled by the HE Sector. This would be legally independent of Government and accountable to Parliament.
This reverses the current governmental trend to simplify for example the current benefits system and instead introduce direct reductions in taxation at source. The NUS would wish to countenance a new tax collecting unit, presumably with powers over non-collection etc., and with all the associated administrative costs. Does anyone remember the furore over the Child Support Agency? I thought the country had learned its lesson - leave tax collection to those proficient in it!
3. Don’t we already have a form of graduate tax?
The NUS argue that "rebranding” the flawed system won’t fool anyone. Instead, they reiterate Vince Cable's argument that "it can’t be fair that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger".
This is a dangerous avenue to go down. The NUS seem to wish to simultaneously charge higher income earners more under this scheme while ignoring the real costs of higher education. Let's take Vince's top commercial lawyer as an example. Currently his fees are set at precisely the same amount as for all other subjects, albeit that a Law degree, as with many degrees in e.g. the arts & humanities is relatively inexpensive to deliver - being primarily lecture driven with none of the high laboratory costs associated with science-based courses. However, if a graduate tax is brought in Vince's lawyer may reasonably ask why he is being charged more for a degree that is relatively cheap to deliver. By contrast, STEM (Science, Technology, Engineering and Maths) subjects are extremely expensive. Vince's lawyer may start to argue that a link should be made between the cost of the subject he has studied and the amount of tax he is expected to pay in return. He will also point out that he already pays a higher rate of tax through income tax.
The NUS cannot expect graduates to sign up to additional taxes on this basis. In the worst case scenario Vince's lawyer will simply choose to leave the country when he has completed his studies leading to a UK brain drain.
4. It would starve universities of the money they need now because the returns come in down the line
The NUS suggest that their Trust will have the power to issue bonds for investors to purchase, thus meeting the immediate funding gap.
This Trust seems to be getting a lot of powers, doesn't it! And, remember, it is independent of Government! In fairness, though, remove the NUS's quango from the occasion and it's not such a bad solution. Governments traditionally raise money by issuing bonds. Of course, the difficulty is finding investors willing to buy the bonds in the first place!
5. This is a huge threat to university autonomy who should receive the fees or contributions from their own graduates
The NUS says that it is 'dangerous' and 'disingenuous' to conflate academic freedom and autonomy with the contribution system. "NUS wants to see a system where research is properly funded and excellence recognised, but that won’t be delivered through a market in prestige where the rich institutions get richer and vice versa."
I'm afraid I simply don't get this argument. What is so dangerous and/or disingenuous about linking a graduate's contribution to the University (s)he attended? I'm afraid this smacks to me of shameless anti-elitism whereby Oxbridge and other Russell Group Universities are vilified simply because they are successful. At the same time of course, the NUS see no irony in stating that they wish to see research excellence 'recognised'.
Presumably the NUS wish to artificially limit the amount of money that they will allow the top Institutions to accumulate from the Graduate Tax, and that any such allowance will have no bearing on the actual costs of delivering an education to students at such Institutions? Attacking such universities simply for the 'crime' of being successful will only lead to those Institutions withdrawing from the current model and setting themselves up as private universities with fees to match. I doubt that is in anyone's best interests.
6. A pure market in fees will make Universities more efficient and drive down prices
The NUS argue that there is no evidence at all that the “market” improves quality or that there is any link between the quality of teaching and the price paid.
This is arguable, but I am surprised that this is being introduced into a debate about graduate tax? I am firmly of the view that entry to University (and to the type of University) should be dependent upon academic excellence, rather than the ability to pay. Variable fees may come in, and is something I would be opposed to, but this is a separate issue to the one specifically of opposition to graduate tax to which the NUS are responding. It seems an attempt to muddy the waters.
UPDATE 3 August:
As might have been predicted, a blog has appeared on the Telegraph website from Neil O'Brien, the Director of Policy Exchange, which opens the discussion on variable fees. In his blog, he argues for a middle way between a graduate tax and variable fees in an attempt to restore a "proper market in higher education". The blog is also notable for pointing out that four of the five current Labour leader candidates are also now backing a form of graduate tax, but that is by the by.
As I suggested in my original post I am uncomfortable with the view of an entirely market driven form of Higher Education, with a market driven approach to fees. I was lucky enough to attend a top UK University when fees were as yet over the horizon. I went on to complete a Masters and a PhD at the same Institution. I completed my studies in theology, what might be termed in a market-driven approach a largely 'unnecessary' subject. Completing a PhD has not really enhanced my employability, but that was never my intention of reading for my thesis. It may sound old fashioned, but I studied for the sake of the studies themselves.
Accordingly, I am uncomfortable with any approach that thinks purely in terms of the 'graduate premium', and draws the line at a first degree, rather than allows the progression to higher studies in the discipline. I am also as I stated uncomfortable with the higher fees such top Universities as my own could command. The ability to attend a top University should be based on excellence alone, not on the ability to pay a premium. It is elitist, but not in financial terms. I hope that some of these views will be reflected in the Browne review.
1. Most graduates would pay much more than they do now
The NUS argue that it is only those who really benefit who will pay more. Earners in the bottom two 'quintiles' would pay under or about half the current amount, while those in the middle quintile will repay approximately the same. Meanwhile, under their proposal there would be a 25 year upper limit under which the tax is payable as well as a cap on the maximum amount to be repaid to ensure 'fairness'.
I guess that 2/5 does not amount to 'most' so assuming the NUS figures are correct the myth is not substantiated. Neverthless it is hard to see what is fair about a tax that bears no relation whatsoever to actual costs and sets out, by the NUS's own admission, to ensure higher earners contribute considerably more. It is nothing more than an extra tax on income. This is apparently 'progressive'!
2. The money would go to the state
To avoid money going into the Treasury, the NUS solution would be to set up a Trust (is that a Quango by another name?) to collect the money and to be controlled by the HE Sector. This would be legally independent of Government and accountable to Parliament.
This reverses the current governmental trend to simplify for example the current benefits system and instead introduce direct reductions in taxation at source. The NUS would wish to countenance a new tax collecting unit, presumably with powers over non-collection etc., and with all the associated administrative costs. Does anyone remember the furore over the Child Support Agency? I thought the country had learned its lesson - leave tax collection to those proficient in it!
3. Don’t we already have a form of graduate tax?
The NUS argue that "rebranding” the flawed system won’t fool anyone. Instead, they reiterate Vince Cable's argument that "it can’t be fair that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger".
This is a dangerous avenue to go down. The NUS seem to wish to simultaneously charge higher income earners more under this scheme while ignoring the real costs of higher education. Let's take Vince's top commercial lawyer as an example. Currently his fees are set at precisely the same amount as for all other subjects, albeit that a Law degree, as with many degrees in e.g. the arts & humanities is relatively inexpensive to deliver - being primarily lecture driven with none of the high laboratory costs associated with science-based courses. However, if a graduate tax is brought in Vince's lawyer may reasonably ask why he is being charged more for a degree that is relatively cheap to deliver. By contrast, STEM (Science, Technology, Engineering and Maths) subjects are extremely expensive. Vince's lawyer may start to argue that a link should be made between the cost of the subject he has studied and the amount of tax he is expected to pay in return. He will also point out that he already pays a higher rate of tax through income tax.
The NUS cannot expect graduates to sign up to additional taxes on this basis. In the worst case scenario Vince's lawyer will simply choose to leave the country when he has completed his studies leading to a UK brain drain.
4. It would starve universities of the money they need now because the returns come in down the line
The NUS suggest that their Trust will have the power to issue bonds for investors to purchase, thus meeting the immediate funding gap.
This Trust seems to be getting a lot of powers, doesn't it! And, remember, it is independent of Government! In fairness, though, remove the NUS's quango from the occasion and it's not such a bad solution. Governments traditionally raise money by issuing bonds. Of course, the difficulty is finding investors willing to buy the bonds in the first place!
5. This is a huge threat to university autonomy who should receive the fees or contributions from their own graduates
The NUS says that it is 'dangerous' and 'disingenuous' to conflate academic freedom and autonomy with the contribution system. "NUS wants to see a system where research is properly funded and excellence recognised, but that won’t be delivered through a market in prestige where the rich institutions get richer and vice versa."
I'm afraid I simply don't get this argument. What is so dangerous and/or disingenuous about linking a graduate's contribution to the University (s)he attended? I'm afraid this smacks to me of shameless anti-elitism whereby Oxbridge and other Russell Group Universities are vilified simply because they are successful. At the same time of course, the NUS see no irony in stating that they wish to see research excellence 'recognised'.
Presumably the NUS wish to artificially limit the amount of money that they will allow the top Institutions to accumulate from the Graduate Tax, and that any such allowance will have no bearing on the actual costs of delivering an education to students at such Institutions? Attacking such universities simply for the 'crime' of being successful will only lead to those Institutions withdrawing from the current model and setting themselves up as private universities with fees to match. I doubt that is in anyone's best interests.
6. A pure market in fees will make Universities more efficient and drive down prices
The NUS argue that there is no evidence at all that the “market” improves quality or that there is any link between the quality of teaching and the price paid.
This is arguable, but I am surprised that this is being introduced into a debate about graduate tax? I am firmly of the view that entry to University (and to the type of University) should be dependent upon academic excellence, rather than the ability to pay. Variable fees may come in, and is something I would be opposed to, but this is a separate issue to the one specifically of opposition to graduate tax to which the NUS are responding. It seems an attempt to muddy the waters.
UPDATE 3 August:
As might have been predicted, a blog has appeared on the Telegraph website from Neil O'Brien, the Director of Policy Exchange, which opens the discussion on variable fees. In his blog, he argues for a middle way between a graduate tax and variable fees in an attempt to restore a "proper market in higher education". The blog is also notable for pointing out that four of the five current Labour leader candidates are also now backing a form of graduate tax, but that is by the by.
As I suggested in my original post I am uncomfortable with the view of an entirely market driven form of Higher Education, with a market driven approach to fees. I was lucky enough to attend a top UK University when fees were as yet over the horizon. I went on to complete a Masters and a PhD at the same Institution. I completed my studies in theology, what might be termed in a market-driven approach a largely 'unnecessary' subject. Completing a PhD has not really enhanced my employability, but that was never my intention of reading for my thesis. It may sound old fashioned, but I studied for the sake of the studies themselves.
Accordingly, I am uncomfortable with any approach that thinks purely in terms of the 'graduate premium', and draws the line at a first degree, rather than allows the progression to higher studies in the discipline. I am also as I stated uncomfortable with the higher fees such top Universities as my own could command. The ability to attend a top University should be based on excellence alone, not on the ability to pay a premium. It is elitist, but not in financial terms. I hope that some of these views will be reflected in the Browne review.
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