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David Willetts and the friendly bankers

June 26, 2011

Fig. 1. The sinister aspect David Willetts takes when shone brightly with a UV light.

In case you’ve not already seen this, this is one UfSO response to David Willetts’ decision to seek out the help of the friendly bankers in plugging the shortfall in education funding -  http://www.guardian.co.uk/education/2011/jun/25/banks-university-funding-private-loans. Response by Prof Effra and does not represent entire spectrum of views of UfSO. All noisy opinions for entertainment purposes, etc.

So The Observer reveals David Willetts is in secret talks with banks to offer student loans, of course, as the response from Santander reveals, so long as they get to make great profit from the interest rates and returns. This after the banks like RBS, Lloyds and others were effectively nationalised and rescued by the government, and paid for by the sale or destruction of public services and public workers.

Worse is to come. The overall agenda of the government since election in 2010 has been class war, wealth redistribution upwards making the rich richer, at the expense of the poor. Under a cynical language of social cohesion and the state backing-off, allowing people to run things without the politicians interfering, the government has in fact rolled out a sly programme of social disintegration and revolutionary changes to British life. For rich people these are happy times, as the May 2011 Sunday Times rich list suggested, with the top 1000 wealthiest increasing their hard-earned gold by 18% in the last year. But wait a minute, aren’t our wages frozen, the prices going up and…? But this kind of rip-off scheme only works if the mark doesn’t realise what’s going on. So with education, making it possible for rich kids to go to university not based on merit, but if they can pay the fees immediately up front, is a great gesture for all the ditzy little Lord and Lady Fauntleroys, toffs with no brains. The fees cap was raised to 9k, and the protection of an independent higher education was dismantled as all education funding – up till now paid by the government to universities, with students paying some of their fees (the “top-up” of 3k as before) – has now been outsourced to students themselves, who as the empowered consumers of the Browne Report go out and choose the right university degree for them. Any relatively unpopular or expensive subjects disappear by the invisible hand of the market.

Lovely in principle. BA Data Entry administration, MSc in Creative Financial misappropriations. But as anyone with debts might’ve told them, by offering to borrow all students 9k a year just for their fees, forgetting here living costsi, the state was going to have to find a very big lending source of cash. And with the Lib Dems managing to adjust minutely the bill so that students don’t have to pay back their loans until earning 21k, which given the current trend of underemployment, seems unlikely for many, much of this money will never find its way back to the government. In a sense, they are now paying far more than expected. The government now has an even more sticky funding problem. Who really pays for all this?

We can see a number of seriously sinister things at work here:

- Willetts goes to the banks, e.g. Santander, to encourage them to create an attractive loan scheme for students. But as The Observer tells us, the banks will only do this if the university ultimately takes the liability for the loan. Shrewd move: if the student can’t repay in time, then rather than writing off the loan as bad, the bank then charges the university effectively the cost for its own service. We saw this with the banking crisis of 2008 too. Even though it was the fault of irresponsible mortgage speculation that the markets and banks crashed, rather than loans being written off as bad, governments instead took the liability of them by bailing out banks and restoring the markets. Banks could continue as normal by not being liable for bad lending decisions, which the public had to pay for. Here it is the university who ultimately becomes in debt to banks. The total marketisation of the university. Bankers laugh, wads of cash whizz past heads in bland City function rooms, Prosecco spills on Gilbert’s tailored-suit, and with their profits continue funding their lapping-dogs in the Conservative Party who make these kinds of policy decisions.

- financial capitalism is now being placed at the centre of social life. George Osborne’s only real political changes as Chancellor have been to decrease income tax and business taxes for the extremely wealthy - everywhere else VAT and National Insurance rises mean the working-class struggle to pay for Philip Green. Ordinary workers have their pay frozen to maintain this. Public workers are sacked or pressured into voluntary redundancy, perhaps after having had to re-apply for their jobs for the umpteenth time, as the finance and services sector continue to expand. Westfield Stratford City opens, social centres, community centres and libraries close. Disabled adults are pushed back into work, or empowered as consumers where they get to pay a social worker – now a “broker” for the rapidly diminishing services available to them (but what if 2 hours physio makes having 48 rather than 36 hours of care unaffordable, and what if you have serious cognitive or mental health problems and you have to work this out on your own?). Nick Clegg calls for each UK citizen to have shares in these worthless banks because – who else will have them? If the public own shares then they’ll feel more responsible and protective of parasitic institutions, whose bonus and tax evasion cultures have pretty much guaranteed a life without retirement and great debt for you and I. The language of a “shares giveaway” obscures the fact that the public already have, or had, a share in most things – public services, education, healthcare. The language of finance and greed here obscures this. Pension schemes become unaffordable, as well as everything else we know each day – rising fuel and food prices, rents. The effects of New Labour’s privatisation of public services like housing or social care are already unravelling. As Southern Cross narrowly avoids bankruptcy, where else do we go to pay for the older generation’s care and medication but back to the banks, the ones who still have money and will give it out, at a price, of course? We should be grateful to Mr Willetts for beginning the negotiations.

- We cannot rely on anything better from the Labour Party, and whatever lies the Miliband peddles we can be assured that there is no appetite in the Labour Party to reverse these changes. Consider Shadow Universities Minister Gareth Thomas’ extremely lame reply to The Observer: ‘”I am all for more private finance in public services, but the banks deciding who gets a student loan or not is a recipe for a two-tier university system’. So indebting the student and worker to banks is fine, as is privatising all public services with the language and goals of finance – which, with social housing, transport, healthcare, has been so effective, no? – so long as the merit of university entry is not apparently imbalanced.

What do we get from this? It’s the same old daily bad news, worse to come. We talk to our friends and family, we feel cynical and resigned. True, we can’t avoid now getting into further and further debt, it’s a new feudalism with the banks at the top, and the media and politicians the bankers pay for beneath them. But there’s far less naivety I think. Bankruptcy becomes a political weapon. But finance is a game of algorithmic speculation, run by digitised machines for the benefits of a few international toffs. The kind of cyber-strike called for by the Deterritorial Support Group might offer a far more fair and effective resistance to the encroachment of social life by private finance.

But ultimately, although we must primarily defend the integrity of education, it is a hard debate, as the UfSO’s exchanges in the recent dire academic controversies and conferences of ‘The University’ [boom boom! loud imperious tone!] have proven. Yawns particularly to the AC Grayling 18k controversy. Hey jejune academics: Grayling is the bell-ended vanguard of the American model to come, which does in fact work pretty well, again if you’re rich or like being in debt. Ramble over, we can defend the integrity of education. Education is a social good, and like all social goods it needs to be protected and maintained, and funded by the government. It’s an easy argument. By quantifying education into a system of league-table targets and grades, whilst at the same time transforming the purpose of education into getting work-ready skills rather than learning, thinking and developing into mature reflective beings, the current education system is dismantling this value. Students become consumers hoping to get the best ‘university experience’ and job skills for an increasingly moribund market. In such a system, debt defaults, signing on and living for free might be more realistic university modules than even the events management and internships suggested. Higher education, like primary and secondary education, should be a free social good that citizens are entitled to, and which the government pays. This cost might be recouped by restoring taxation rates to pre-1979 levels. The argument that if tax increases, the rich leave is a myth perpetuated by those powerful people who might lose something from it.

This however is unlikely. Unprofitable and unpopular subjects are deleted as universities compete to attract student-consumers, ultimately paying the banks for this custom like everyone else, a control based on debt. This amounts to a censorship of the unprofitable. To finish with an old and maybe boring point then, perhaps the university is in its death throes. We’ll need to keep moving and learning elsewhere. New education spaces within the university (see the piece below). Like a bloated British industry in the 1970s, less popular universities charging 9k rates (UEL, London Met etc.) go bankrupt, maybe get state bailouts that marketise them into hands of private university companies like BPP. Eventually they disappear, the university becomes a place of quick-fix 2-year degrees built to pass, not built to last. But out of the bland red-brick and glass-plate ruins a new resistance blooms. Teachers in primary, secondary and higher education build a movement of solidarity, realising they have far more in common especially with marketisation of workplaces, quantification of young peoples’ education and pension cuts. A sly campaign of internal sabotage begins, REF programmes incomplete, self-auditing torn up or “lost”, whilst self-trained indebted students break into shambolic systems and delete all debt and fees records from computers. Pensioners, workers, disabled, unemployed and students build a point of resistance to fight against the government’s war of the rich against poor. Who knows what might happen next. These are exciting times. Our thanks to David Willetts for his total incompetency….

———

i More likely cost of 60k for 3 years study, more so for people in London. Willetts also absurdly assumed that most unis would charge far less than 9k, but any study of the market shows that by depreciating the relative value of a product, the consumer assumes it to have less value and will be less inclined to purchase. UEL charging the same 9k rate as Kings ensures its degree has same-seeming merit.

 

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