Tuition Fees: Why are Daily Mail readers not rioting?

OK, if you are not in the UK, or more specifically England and Wales, you may not know about the current attempt to revolutionise the way UK Higher Education funding works, but you have probably seen the  pictures of some small amount of rioting associated with the two huge student protests that have occurred so far.  There is another protest scheduled for Tuesday I believe; what puzzles me is why Daily Mail readers have not joined the students on the marches and fighting?

Let us start with the key facts: what it is about. In essence, until now the UK Govt has given universities a block grant, a sum of money to each university to subsidize their students, and this system has lasted about fifty years. Since the 1980’s, with the biggest single change in student wealth  — the withdrawal of Housing Benefit, a payment that subsidizes rent, followed shortly by the withdrawal of dole payments in the vacations — a variety of different changes have tried to improve the system. First grants, which did not have to be repaid, were replaced by government backed student  loans,  and then tuition fees were brought in. Now they are up to about  £3,000 p.a; the latest change will see them rise to up to £9,000 per year, and the government will cease to support the universities, which will be dependent on tuition fees to survive. (There are a few exceptions, and I have not time to do the issues justice. There is an excellent overview in depth here.)

Now OK, I can’t see many Daily Mail readers fuming at the prospects of tuitions fees. The Daily Mail is a right-wing UK newspaper that is read, by one presumes, the home-owning middle classes, and while they may resent having to pay extra-for their children’s education, they can probably afford it, unless they were almost bankrupted by the fees putting their kids through private school educations, as some are. So why do I foresee Daily Mail readers suddenly rioting? Because this could I think indirectly lead to their worst nightmare — a fall in house prices.

COULD FERAL CHILDREN GIVE PROPERTY PRICES CANCER?

You may have guessed that is not a real Daily Mail headline – it’s from the Daily Mail Headline Generator.  A few seconds playing with that should give anyone who has read this far but has never heard of the paper the idea. The Mail is obsessed with property prices, which are seen as possibly the single most important thing in the universe as far as I can make out. Any fall in them should be met with sackcloth and ashes, lamentation and gnashing of teeth.

Now I don’t know that a rise in tuition fees will result in a fall in house prices, but I’m going to argue why it might. Firstly, since the baby boomers grew up past university age, you might have suspected that universities would have retracted, and less places would be available now that in say 1985. In fact as UCAS figures show, the expansion in UK student numbers continued — for details see HESA – this conjuring trick being pulled off by having a higher percentage of school leavers entering tertiary education.The figure varies by source, but between 30 and 40% of school leavers now go to university.

And most of them still leave home, and give the chronic shortage of dorm places in most universities, fueled by two decades of rapid expansion in the size of the institutions, they rent from the private sector. I don’t think the commercial student accommodation companies who build large dormitory style blocks have much to worry about — that market is probably pretty safe, and they will weather tuition fee rises, simply adjusting rents. In fact, it is probably a sound place to put your money – such large student blocks look like the will be  perennially popular, as student flock together,  and in a crunch can always be converted to hotel or flat accommodation for non-students.

A huge amount of student properties however seem to be ones bought by parents for their kids at uni, then rented to others after the children leave the uni. Other canny investors bought cheap in the 90’s property slump, and have been living off the proceeds of student rents ever since.

So what will happen if tuition fees rise?  My first guess is that a lot of kids will be put off going to university, or simply unable to afford the fees, even given government loans. So if that happens the universities will see a retraction in numbers, and the immediate knock on effect will be to the student rental market, as less students will be competing for the same housing. Prices will inevitably drop, and given you can cram a lot of students in to a small house, the alternative, young working or HB supported couples, will not be as lucrative. In the university towns even a small reduction in numbers could trigger a lot of properties being put on the market, and as they buy to let for students market falters, house prices generally will drop.  Of course nightclubs, bars, and student targeted businesses will suffer first as students have less disposable income, and are unable to afford the excess of today’s generation – but the housing market can hardly be unaffected? Increased caps on Housing Benefit will again reduce the potential of that part of the market, which can not take up the slack.  The only way is down for prices if student numbers fall?

I expect that there will be compensating mechanisms – the 18 to 21 year old population will still need housing – but if significant numbers stay at home with mummy and daddy and go to  a local uni, or get jobs instead and live as couples not four to a house or more, well, inevitably the university towns student rental sector will decline, and there will be a knock on effect on housing stock prices throughout these towns, and then the wider property market?  It’s still a few years off yet, but perhaps Daily Mail readers might want to pull on their balaclavas and go riot on Tuesday? 🙂

cj x

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About Chris Jensen Romer

I am a profoundly dull, tedious and irritable individual. I have no friends apart from two equally ill mannered cats, and a lunatic kitten. I am a ghosthunter by profession, and professional cat herder. I write stuff and do TV things and play games. It's better than being real I find.
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4 Responses to Tuition Fees: Why are Daily Mail readers not rioting?

  1. DaveD says:

    So subversive!
    A little more colour for those unfamiliar with the Daily Mail:

  2. Chris Jensen Romer says:

    When I wrote this I had not seen this, which actually adds a further supporting factor to my argument — http://www.telegraph.co.uk/finance/personalfinance/8073891/Growing-student-debt-stopping-first-time-buyers-stepping-on-property-ladder.html Soukd like Telegraph readers might have to join the Mail ones. A drop in mortgage vailability willof course have an even greater effect on the general housng market, as house prices are as far as i can see directly dependent on the availability of loans.

    cj x

  3. First off, I dispute the argument that the Daily Mail is middle class. The middle classes read broadsheets; notably, the Guardian and the Telegraph. The Daily Mail is an aspirational newspaper read by the upper working class who would like to become middle class. The Daily Mail is a tabloid, a mass-market paper, driven by deliberately sensationalist headlines designed to bring in casual readers. It is written in simple language, short sentences, with references only to immediate everyday man-on-the-street issues (mortgages, tax, fashion, cars, spending). It’s a division above the red-tops like the Sun or the Mirror, but still only a baby step on the path.

    Secondly, I dispute the size of the buy-to-let market by parents. I don’t doubt that there has been a huge expansion in the buy-to-let market, but I doubt very much that parents of students make up a significant percentage of that market. The number of parent-owned student buy-to-lets may have massively increased, but it started from a very small base; a 100% increase on bugger all is still bugger all. Unfortunately despite working for a university statistical bureau, I don’t have statistics to hand to back up either your or my take on that. Houses are expensive things, and will remain expensive things; this is an island with a small size and a large population, housing is always going to be at a premium. I doubt very much that any family with a household income below 80k is really going to want the expense or indeed the considerable hassle of buying to let, especially not to the student market who are generally acknowledged to not be the most well-behaved of tenants.

    Thirdly, perhaps my main point. Why are the middle class not rioting? The middle class have learned that protest achieves nothing, and that the ballot box is the only method of performing change.

    We middle class had a defining protest moment; the Countryside March in 2002. This was the largest protest march in history, the Metropolitan Police estimated the attendance at over 400,000. It was well organised and entirely peaceful; imagine a typically well-run village fete, only scaled up a thousand times.

    The Countryside March was also momentously unsuccessful.

    Not only did it fail in its primary goal of getting hunting with more than two dogs re-legalised, it failed in all of its secondary goals such as increasing government funding for rural schools, preventing rural post office closures or reducing road/fuel tax for villagers whose bus service had been cancelled.

    This failure was a huge slap in the face for those, primarily on the Field Sports wing, who had encouraged the middle classes to believe that the tactics of the left – protest and single-issue campaigning – would be successful with the left-of-centre New Labour government.

    Then the next biggest march in history rolled around, the anti-war rally in 2003; this was also a massive failure. Government policy hardened; there were troop surges.

    Unlike the beligerent career protester, the middle classes learned from these experiences. They learned that all the fuss about “spin” and “single issue politics” was just journalistic dreaming, trying to create a movement out of vacuum simply to create a news “vibe” for otherwise empty 24-hour news schedules and RSS-driven newspaper websites. The middle classes learned to value our old ways; the market town Conservative association; the Liberal club; the parish council; the letters to the MP; and above all – the value of voting.

    And the vote is all that matters. All the power is with the elected government, the emphasis being “elected”. That is why the middle classes don’t riot; not because it is grubby or violent, but because it is ineffectual. The middle classes are society’s achievers; people from average and sometimes modest backgrounds who have got results. And protest doesn’t get results; voting does.

  4. Chris Jensen Romer says:

    Too busy working to respond to the issues, but clearly I don’t believe for a moment Daily Mail readers will riot; the point of that joke was to hang a more serious discussion of the impact of raised tuition fees on housing prices on it. In fact, and i have only a few sources to go on, we know that raised student debt is delaying entry in to the mortgage market –and the average student debt for 2010 on graduation is being pitched as £33,000 as I recall? So a significant increase in student debt will delay entry in to the home owning market for some students. What would be interesting would be if HESA collected data after three and six years on accomodation status, no idea if they do.

    I expect the Joseph Rowntree Foundation will perform an analysis this year – for now I shall simply get some accurate data on the size of the student rental sector in Cheltenham, as that is accessible data, and then we can look at if there wil be an impact.

    Around 13% of student housing was owned by parents here (chelt) in 1999. While that is as you say a small figure, a number of those parents owned multiple (and more than five) properties by that year, which suggests to me rather than buying for their little dears they were buying as an investment a pattern that certainly was rather new to the 90’s, when according to the JRT a sizeable take up of landlordship as an investment expcted to provide a commercial return occurred.

    I’ll have a go at getting the data later on the number of student households. Certainly in the private rental sectors a few professional landlords own a tremendous percentage of the properties, but I suspect student housing differs significantly.

    Oh and as to “elected” government, if you try telling students that, and as it happens i have, they say the coalition was not elected, as it was a hung parliament. Hardly hanging chads but hey, perception is generally more important than reality, or students would pay far more attention to local level politics, as usually that will impact them more than they realise.

    cj x

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