“You can go, you can afford to stay, and it will add value when you leave”

Labour's offer to students ought to be one sentence long: you can go, you can afford to stay, and it will add value to you when you leave. Those three things have always been at the core of what Labour might offer, but each has been worn down over time.

Part of the difficulty is that Labour has not drawn a clear enough line between its offer to students and its offer to graduates. Raise higher education funding with most people in the party and the conversation turns quickly to the interest on Plan 2 loans. That is a real concern – the psychological weight of a loan that never seems to shrink is something my generation of policymakers underestimated. But changing the loan terms makes no difference to anyone currently in or about to enter university. Their problem is that the maintenance loan does not cover the cost of housing, and that they are working at levels which are opening up a class divide in the student experience.

When I went to university twenty-five years ago, as the first in my family, my experience was broadly similar to that of the wealthier students alongside me. Today I would be working several jobs and missing the social and cultural life that gives university so much of its value. We have allowed a wide gap to open between the middle-class and the working-class student's experience, and what each gets out at the end is different as a result.

And what students get out at the end is not always, or automatically, the return on investment that government likes to talk about and the Treasury likes to worry about. Often it is the ability to move on in their own lives. Learning for its own sake matters. It does feed the economy, but it is rarely the kind of basic training that employers ought to be providing themselves. It should be something deep and enduring – something that reaches into lifelong learning and lets people keep learning across their lives.

Nor is the answer simply to raise maintenance. With rents where they are, much of any increase would pass straight through to student housing providers. So the harder question is how to build a system in which better support actually reaches students.

That means looking at how the money flows. We route almost all public funding for higher education through the loan system, where it works as a voucher in the student's hand. The figure that drives the system is therefore not the graduate, nor even the student, but the applicant: bring them in and the money follows. That makes it very hard for government to invest strategically in the kind of higher education the country wants, or to shape the sector around what students actually need.

It is why the most useful immediate step is for government to take an active role in reconstructing the sector – supporting federations, mergers and new arrangements rather than waiting for them to happen out of necessity. Two struggling institutions combined do not make one strong one. Many universities are responding to their incentives by converging on the same shape, with the same mix of subjects aimed at the same students, and there are not enough of those students to sustain them all. Deciding the size and shape of the system, and how students are distributed across it, is a job for government. It is not an argument for less higher education – we need more of it – but it does mean spending the money we have more deliberately, and accounting openly for where it comes from.

The underlying question is whether it is still worth it, and the evidence is clear: on average, yes, and by a significant amount. Yes, there are real problems of quality in parts of the sector that need addressing, and yes, students who worry about cost are making an accurate judgment about the system as it stands. But a smaller graduate premium is a challenge to particular institutions, not an indictment of higher education itself. Degrees are not worth less because more people have them, any more than GCSEs are worth less because we all have them. A highly educated workforce matters, and there is no route to prosperity in every postcode that does not go through our higher education system.

Behind all of this sits an older question about what the state thinks universities are for. It would be a mistake to treat the pull towards degrees that lead straight to employment as belonging to one side of politics. The story that Charles Clarke, as a Labour Education Secretary, questioned why we funded medieval history has stuck for twenty years, however much he disputed it at the time – and it stuck because it sounded plausible. And it is the current government that has stopped funding creative and performing arts as high-cost subjects altogether. Across the political class there is a settled assumption that such things need not be subsidised. But one reason we fund universities at all is that knowledge cannot be ordered in advance. If we knew for certain which research would produce the next vaccine, we could fund only that – but we don't, and nobody can. A system built on that uncertainty needs patience from those who pay for it, and a degree of humility before the task of creating knowledge that the political class has not always shown.

I regulated universities for four years, and I could list their faults at length. But the country needs them, and students need them. An offer to students that ignores the state of the sector will not hold. The one that lasts will be designed, on purpose, around the three things students have always needed: that they can go, that they can afford to stay, and that it adds value when they leave.

(This is an edited reconstruction of my remarks to "A New Settlement for University Students", hosted by Russell Group Students' Unions with PLMR at Labour Party Conference, 28 September 2026.)