On YouTube here below (in three parts) is a 30 minute interview with Nick Clegg on University funding. The interviewer is Dr Evan Harris of this parish.
I thoroughly recommend viewing the interview. It covers an enormous amount of detail on the controversy.
Hat-tip: Nick Thornsby
A transcript is here.
http://www.youtube.com/v/L_Ii3E0vFy0?version=3
See Nick Thornsby’s excellent post here.
One of the most bizarre things about the University Funding debate, has been the NUS/Labour charge that the £21,000 threshold will only be worth £18,500 (in today’s terms) when the scheme starts in 2016 compared to the £15,000 threshold today.
So, what they have done is applied a “Net Present Value” table – see above – at a 2.2% rate to see what £21,000 in 2016 will be worth in today’s terms. It’s £18,500.
So they then leave us to compare £18,500 in 2016 with £15,000 today, and even go further to compare the value of £15,000, presumably if invested, when that threshold commenced in 2005 with what it would be worth compared to 2005 in 2016, which is £19,057.
It was a while ago, but I studied net present values at University. I still have my tables book somewhere.
Admittedly, I have to clear off a few cobwebs in my brain to say the following but I think I on a safe footing.
The problem with the NUS/Labour approach above is that it is complete bollocks.
If you are comparing amounts of money, you have to use the same timelines for both of the amounts.
So the current threshold is £15,000. In 2016, £15,000 today will be worth £13,200 allowing for inflation. So you then need to compare that £13,200 with what £21,000 expressed today will be worth in 2016 – which is the £18,500 above.
So you either compare £15,000 with £21,000 today and say that the difference is £6,000.
Or you compare £13,200 with £18,500 in 2016 and say that the difference is £5,300. You can’t mix the two comparisons up and compare what’s £15,000 today with what £21,000 will be worth in 2016 (£18,500) – that would be comparing apples with pears.
Going further and comparing what was £15,000 in 2005 with what it will be worth in 2016 with £21,000 today and what that will be worth in 2016 is comparing apples with bricks.
*Also bear in mind here that the £15,000 was a static £15,000 without provision for uprating annually in line earnings, as there will be for the government’s £21,000.
From the BBC:
The government announced the salary threshold at which graduates start to repay fees will be uprated each year in line with earnings from 2016 – not just every five years, as had been planned.
Also, Nick Thorsnby analyses the NUS/Labour claim about the £21,000:
This analysis is taken from a report by Million+ (a HE think tank) called Fair, Progressive and Good Value?. The report seeks to analyse how much of an improvement the increase in the repayment threshold to £21,000 in 2016 will be.
And the report says this:
Assuming a discount rate of 2.2%, £21,000 in 2015/16 is the equivalent of £18,500 in today’s money.
So it’s quite clear that the £21,000 threshold will be a marked improvement compared to the situation graduates are in today.
Liberal Burblings 