fabian tract 383 
social services for all? 
part two 

Mark Blaug 4 
selectivity in education 2S 

H. 
D. Hughes 5 how far is selectivity really 
necessary in education? 4C 
Bleddyn Davies 
6 the cost-effectiveness of 
education spending 

this is the second of four pamphlets dealing with selectivityand the social services 


this pamplet, like all publications of the Fabian Society,
represents not the collective view of the Society but only the . 
view of the individual who prepared it. The responsibility of 
the Society is limited to approving the publications which it 
issues as worthy of consideration within the Labour movement. 
Fabian Society, 11 Dartmouth Street, London SW1 
June 1968 7163 0383 3 


selectivity in education 
ark Blaug 
·'Selectivity," I take it, is the principle that social benefits should be distributed 
in relation to needs, needs being revealed by some form of income assessment or 
' means test." It stands opposed to the principle of " universalism," that is, a 
iystem of making social benefits available freely to everyone, regardless of 
ndividual need. The arguments on both sides are well known. The refusal to 
;oncentrate limited resources on improved benefits for those who need them most 
s said to lead to inadequate total expenditures on welfare; furthermore, since the 
;apacity to make use of free social services is not equally distributed, the effect 
s frequently to provide free social services for those who need them least. The 
:lefence of the universal principle, on the other hand, is couched in egalitarian 
~ather than in financial terms: universalism is intended to eradicate the stigma 
:hat attaches to the discriminatory receipt of public assistance, and to destroy 
and for all the social privilege that is inherent in the juxtaposition of a 
?rivate sector with and a public sector without charges. 
fhe current debate on the financing of welfare services, however, is not satisfac-
:orily depicted in terms of the polar extremes of selectivity and universalism. 
Within both camps, there is, so to speak, a " right " and a " left " wing. Some 
1dvocates of selectivity urge a selective system on grounds of fundamental values 
md not merely of financial imperatives: they look forward to the growth of 
private welfare services competing with the state sector because they believe that 
it would expand the scope of choice, serving to restore "consumer's sovereignty" 
in welfare. This point of view is perhaps best represented by the staff publications 
::>f the Institute of Economic Affairs, but is widely shared by many who vote 
Liberal and Conservative. (For a comprehensive viewpoint see A. Seldon, 
H. Gray, Universal or Selective Social Benefits? , Research Monograph 8, Insti-
.ute of Economic Affairs, 1967, and H. Gray, "Towards a new welfare 
;trategy ", New Society, 1 February 1968). Similarly, ·W:hi.Je the Labour party 
:~.s a whole, may still be said to subscribe to universalism, some party supporters 
have recently come out in favour of selective charges within the state sector, 
:tdministered with the aid of income codes for everyone. (D. Houghton, Paying 
For the Social Services, Institute of Economic Affairs, 1967) They point to the 
impossibility of raising standards and expanding existing services out of general 
taxation, given the firm expectation of a low over-all growth rate for the next five 
::>r ten years; the fact that Britain enjoys an unusually high average propensity to 
consume (personal consumption as a percentage of the gross domestic product) 
is an opportunity to enlist private contributions, an opportunity that is denied to 
u:. under a universalist system, because people as consumers always demand 
more " free " social services than they are willing to pay for as voters. They deny 
that any new principle is involved: supplementary benefits, rate rebates, council 
rents in some areas, school meals, student grants, legal aid, and the new mortgage 
option scheme are all geared inversely to means as measured by earned income. 
selectivity in education 
ark Blaug 
·'Selectivity," I take it, is the principle that social benefits should be distributed 
in relation to needs, needs being revealed by some form of income assessment or 
' means test." It stands opposed to the principle of " universalism," that is, a 
iystem of making social benefits available freely to everyone, regardless of 
ndividual need. The arguments on both sides are well known. The refusal to 
;oncentrate limited resources on improved benefits for those who need them most 
s said to lead to inadequate total expenditures on welfare; furthermore, since the 
;apacity to make use of free social services is not equally distributed, the effect 
s frequently to provide free social services for those who need them least. The 
:lefence of the universal principle, on the other hand, is couched in egalitarian 
~ather than in financial terms: universalism is intended to eradicate the stigma 
:hat attaches to the discriminatory receipt of public assistance, and to destroy 
and for all the social privilege that is inherent in the juxtaposition of a 
?rivate sector with and a public sector without charges. 
fhe current debate on the financing of welfare services, however, is not satisfac-
:orily depicted in terms of the polar extremes of selectivity and universalism. 
Within both camps, there is, so to speak, a " right " and a " left " wing. Some 
1dvocates of selectivity urge a selective system on grounds of fundamental values 
md not merely of financial imperatives: they look forward to the growth of 
private welfare services competing with the state sector because they believe that 
it would expand the scope of choice, serving to restore "consumer's sovereignty" 
in welfare. This point of view is perhaps best represented by the staff publications 
::>f the Institute of Economic Affairs, but is widely shared by many who vote 
Liberal and Conservative. (For a comprehensive viewpoint see A. Seldon, 
H. Gray, Universal or Selective Social Benefits? , Research Monograph 8, Insti-
.ute of Economic Affairs, 1967, and H. Gray, "Towards a new welfare 
;trategy ", New Society, 1 February 1968). Similarly, ·W:hi.Je the Labour party 
:~.s a whole, may still be said to subscribe to universalism, some party supporters 
have recently come out in favour of selective charges within the state sector, 
:tdministered with the aid of income codes for everyone. (D. Houghton, Paying 
For the Social Services, Institute of Economic Affairs, 1967) They point to the 
impossibility of raising standards and expanding existing services out of general 
taxation, given the firm expectation of a low over-all growth rate for the next five 
::>r ten years; the fact that Britain enjoys an unusually high average propensity to 
consume (personal consumption as a percentage of the gross domestic product) 
is an opportunity to enlist private contributions, an opportunity that is denied to 
u:. under a universalist system, because people as consumers always demand 
more " free " social services than they are willing to pay for as voters. They deny 
that any new principle is involved: supplementary benefits, rate rebates, council 
rents in some areas, school meals, student grants, legal aid, and the new mortgage 
option scheme are all geared inversely to means as measured by earned income. 

Indeed, the Labour argument is no longer that of pure universalism, but one of 
grafting additional selective benefits on an essentially universalistic structure of 
welfare services. 

What controversy remains within the ranks of the Labour party is whether to 
extend the selective principle as far as to introduce, say, charges for state nursery 
schools or charges within the National Health Service, not only for prescription 
fees, but also for consultation fees and short stays in hospital. However, while 
some are convinced that the coding system of PAYE can be carried below the point 
of no tax liability, so that everyone will receive a code qumber either for purposes 
of taxation, if income exceeds tax allowances and exemptions, or for allocating 
selective social benefits, if allowances and exemptions exceed income, the "high 
priests of universalism "-Professor Titmuss, Professor Abel-Smith and Professor 
Townsend-continue to deny the administrative feasibility of a "negative income 
tax." (See R. Titmuss, "The practical oase against the means test state", New 
Statesman, 15 September 1967, P. Townsend, "Trhe need for a social plan", New 
Society, 14 December 1967). Now, it is true that the ·incidence of unemployment, 
disability, adversity, dependancy is not conveniently synchronised with the Inland 
Revenue financial year, thus necessitating some payments in advance of the coding 
that would justify them. It is also true that a negative income tax would have to be 
so devised as not to create a disincentive effect for heads of households working 
in low-paying occupations. The scheme proposed by D. Lees ("Poor families 
and fiscal reform," Lloyds Bank Review, October 1967) is perhaps open to this 
objection. But all that this proves is that a negative income tax is not a perfect 
device for administering selective benefits; it is merely the best that we can think 
of. Provided it is agreed that there is a case for deliberate discrimination between 
people in providing tax-financed public services, we should be arguing, not about 
the pros and cons of means tests, but about the appropriate extension of the 
selective principle and about practical ways of improving the assessment of income. 
It has been alleged that the real obstacle to putting welfare benefits on a reverse-
PAY£ basis is the inability of the Inland Revenue to cope with universal income 
coding before 1971 or thereabouts. But this is merely to say that a negative income 
tax would have to be accompanied either by comprehensive tax reform or by an 
overhaul of the Inland Revenue. Until it is shown how we can select those in need 
of social benefits without investigating their income, all attacks on means tests as 
such are simply refusals to face unpleasant economic realities. 

What continues to divide the Labour party view from radical thinking about 
welfare outside the party is the notion mentioned earlier, namely, that choice 
between public and independent provision should be facilitated by encouraging 
voluntary private expenditure on welfare services. Even when there is common 
ground in the view that additional purchasing power should be drawn into welfare 


at the expense of personal consumption, there is no agreement as to whether this 
should be accomplished by charges for state health services or reductions in 
subsidies for council housing, on the one hand, or by a voucher system which 
could assist low-income families to purchase private medical insurance and private 
housing, on the other. This particular dispute is much more difficult to resolve 
than the one between the friends of Labour about a little bit less or a little bit 
more of selectivity, not only because it involves basic value judgments, such as 
trusting people to choose social services in their own best interests, but also because 
it requires prediction of the consequences of new and hitherto untried social 
arrangements. In one sense, everyone favours " competition for excellence" and 
giving people more opportunities to cultivate the art of choice in welfare. But 
would it work out that way? The great fear is that the state services will be 
denuded and impoverished as those that opt out increasingly refuse to subsidise 
those that are forced to stay in. That this is not a groundless fear is indicated by 
the contrast between " public squalor and private affluence" in even so wealthy 
1 country as the United States. Nevertheless, there is valuable experience in other 
European countries where more use is made than in Britain of privately provided 
but publicly subsidised welfare services. And a few experiments in particular 
localities in these countries might throw light on the effects of underwriting 
private initiative in the provision of social services. The point is that the issues 
involved in alternative welfare systems have never received adequate discussion. 
Debates on selectivity quickly degenerate into arguments about sources of 
finance: can we divert defence spending to the social services, or must we take 
more money out of private pockets? The questions we should be asking, however, 
are: should we give people the wherewithal to visit private doctors?; should 
parents be allowed to send their children to private schools if they have the means, 
:md if so, should we concentrate on equalising means?; is something like the 
mortgage option scheme a better answer to housing needs than additional council 
houses?; do we want to give aid to underdeveloped countries in the form of 
indiscriminate subsidies to overseas students?; would the quality of state services 
improve if the state had to compete with rival suppliers?; and so forth. Alas, 
the current economic climate is all too likely to contribute to mere penny-pinching 
uguments. I hope that in what follows I shall manage to avoid these, if not 
1ltogether, at least in part. 

the trends towards selectivity 

The last few years have seen a strong swing towards selectivity in education, the 
most prominent example of which was the recommendation of the Plowden 
Report on Primary Schools to establish "educational priority" areas by 1968-69, 
that is, to spend an extra £11 million to discriminate positively in favour of 
socially deprived areas in an attempt to bring schools in these areas up to the level 


of the best. There is still some confusion about how the education priority areas 
will be identified and whether, once having been identified, the areas will be 
publicly labelled as receiving positive discrimination. Furthermore, it still is nob 
certain whether the extra help will, in fact, be given this year but, in principle at 
any rate, the idea of priority areas in primary education has now been accepted. 
In other respects, however, the Plowden report shied away from the full implications 
of selectivity. For example, it recommended the extension of "free" nursery 
schools to the tune of £29 million, and it was left to a minority of the Plowden 
Committee to argue the case for charges on nursery education, simply as the only 
practical means of getting some state nursery schools started at long last. 

The language of the "Note of Reservation on Parental Contribution to the Costs 
of Nursery Education," signed by eight members, including the chairman, is 
worth quoting: "Extra resources are needed, and (apart perhaps from some 
voluntary and private nurseries which will charge anyway) will not be forthcoming 
on a large scale unless the amount of money being spent on education is substantially 
increased. . . . The answer we suggest is a parental contribution. . . . Our 
suggestion is advanced as much in the interests of children whose parents cannot 
afford to pay as it is of others. Without a parental contribution we fear that 
nursery education will not be extended at all and such children be no better 
off that they are today. With it, we can be more optimistic, and, if the hopes are 
realised, there will be nursery schools which can be attended by the children of 
poor parents, in and out of educational priority areas. They are often just the ones 
who could benefit most. Charging the rich will be a means of helping the poor. 
Charging those with smaller families will be a means of helping those with larger," 

(Children and their Primary Schools: A Report of the Central Advisory Council 
for Education (England), p487, HMSO, 1967) 

It is amusing to consider that the neglect of nursery schools in this country 
survived 20 years of over-full employment, during which time every pound 
spent on providing nursery school places would have undoubtedly yielded a 
handsome return in the form of the output of released female labour, only to 
become widely endorsed now that the extra labour will be largely redundant. 

Another indication of the trend toward selectivity is the recent increase in the 
charges for school meals, combined with the abolition of free secondary school 
milk. The new charge is ls 6d a meal, but the gross cost of producing a meal is 
nearly 2s 6d. The implied subsidy on school meals and on free milk in primary 
schools is currently running at about £90 million a year, or almost 5 per cent of 
total expenditures on education; with the proportion of children taking dinners 
growing at 4 per cent per year, this sum is estimated to rise to about £175 million 
in 1972-73. The increase of the charge to 1s 6d per meal will increase income 


from private contributions by almost £20 million if we assume that the increased 

charge will not reduce the number taking meals. 

In 1957, when charges were raised by 11 per cent, the numbers taking dinners 

fell by 4 per cent; in other words, the elasticity of demand for school meals was 

0.35. However, it is certain that the elasticity will be higher for the 50 per cent 
increase that is to take effect shortly. 
:If the cost price of 2s 6d were charged, with suitable remtss1ons for children 
from poor families, the saving might be as high as £50 million-£60 million, 
although the exact effect on demand would then be difficult to predict. 

.Any significant increase in charges for school meals and primary school milk 

' 

would adversely affect those children and families who need the service most, 
unless a means test for purposes of remitting charges can be cheaply and efficiently 
administered. In the absence of a negative income tax, one solution would be to 
add the full cost of school meals and milk to family allowances and then to recoup 
the extra expenditure on family allowances by increasing the progressive incidence 
of the current tax on family allowance payments, similar to the way in which the 
chancellor proposes next year to offset the scheduled increase in family allowances 
with an increase in the amount reclaimed through income tax. The entire problem 
is complicated by the fact that any adverse distributional effects of raising school 
meal charges will be counteracted by the positive distributional consequences 
of the Plowden expenditures on " educational priority " areas. What we need to 
know is the proportions of children in different income groups and from different 
family sizes taking school dinners. The existing evidence is difficult to interpret, 
but one multiple regression analysis revealed surprisingly enough that the female labour 
force participation rate in different areas explains "dining rates" (proportions 
of children taking school meals between areas) better than the poverty, 
population density, and avera-ge .family size of the areas. (Bleddyn Davies, Mike 
Reddin, "School meals and Plowden," New Society, 11 May 1967) On the other 
hand, about 300,000 children are now receiving free meals, which is about 7 per 
cent of all children taking school dinners, but the estimated number of children 
under the age of 16 in families with incomes below the National Assistance Board 
scale rates is about 500,000 (ibid). Unfortunately, we do not know whether the 
difference of 200,000 is due to lack of information about remission of charges, 
the reluctance of parents to be means-tested, the willingness to pay the nominal 
sum of ls 6d, or, of course, preference to eat at home. In the present state of 
knowledge, it is not possible to pontificate on the social justice or injustice of 
raising charges for school meals and milk. 

Further indication of the trend toward selectivity is provided by the rise last year 


of fees for overseas students and for some non-vocational adult education courses. 
In both cases, the new fees are still well below the average costs of providing the 
service. Nevertheless, there was furious opposition to both increases, most of 
which was unrelated to the issues involved. The increase in the fees of overseas 
students was badly managed from the start. Nevertheless, the then Minister of 
Education had some grounds for feeling that the case which he did present to the 
House of Commons never received a hearing, either among British students or 
among their teachers. The move was widely interpreted as a blow to the underdeveloped 
countries, a betrayal of sacred obligations to our ex-colonies, and so 
forth, ignoring the fact that about 30,000 out of the 72,000 overseas students in 
this country come from advanced countries, and that about half of the 42,000 
overseas students from underdeveloped countries are recipients either of awards 
from their own governments, or from a British official source, or from an international 
organisation. (Overseas Student in Britain, pp3-4 and table A, British Council, 
1966) In other words, for the sake of 20,000 students, we subsidised and still 
subsidise 70,000 students. Would it not be preferable to extend all foreign aid to 
governments instead of to students? Indeed, an important category of beneficiaries 
of subsidised fees to overseas students are the children of well-to-do families in 
the underdeveloped countries who manage somehow to obtain scarce foreign 
exdhange. And if we wanted to assist individuals rather than governments, would 
it not better to mise fees all ·round and at the same time institute a scholarship 
programme to aid those that cannot obtain the approval of their governments? 
Similarly, the addition of only a few shillings to the 25s. charged for certain 
evening courses that are alleged to cost £12 14s per student should really have 
been criticised as being too small. Adult education in Britain is, on the whole, 
badly staffed and there are no prospects of obtaining better staff without a 
significant rise in fees. This is quite separate from the issue of evening degree 
courses for mature students in full-time employment. There is a case for the 
creation of more institutions of the Birkbeck pattern outside London with low 
fees and generous financial aid on the same terms that are now available to 
full-time university students. This brings me to higher education in general which, 
it seems to me, is the one level of education which most stands in need of some 
financial rethinking. Before turning to this question, however, I would Jike to 

pause a moment over some tendencies in secondary education which some 
commentators have regarded as manifestations of the tenets of "universalism." 

I have made no reference to comprehensive schools, the trend toward unstreaming, 
and the deferment of the raising of the school-leaving age to 1973. These, 
however, have little to do with the bone of contention between the selectivists and 
the universalists, which is, if I may repeat myself, whether to distribute social 
benefits in relation to income or to everyone irrespective of income. Now, one 
may be a selectivist and still disagree violently with other selectivists, and with 


niversalists, about the appropriate scale of higher education, the particular 
method used to select children for admission to higher education and at what 
1ge to begin to do so, the educational and social effects of streaming in secondary 
;chools, and the desirability of keeping children off the labour market until 16 
·ather than 15. Moreover, one may take a position on these questions in principle 
md yet view it quite differently in practice, given the present supply of teachers 
wd distribution of school buildings. From almost every point of view, compre-
llensive reorganisation, streaming, secondary school-leaving examinations, and the 
;tatutory leaving-age are much more important issues than that of means-testing. 
However, they are not issues of which an economist can speak with authority. 
fhis is not to deny that, say, comprehensive secondary schools would constitute 
1 much more substantial selective benefit to working-class parents than cheap 
;chool meals, nor that the £100 million we would have spent in the next few years 
n preparation for raising the school-leaving age in 1971 would not have been spent 
;electively on poorer areas and understaffed schools, but simply that so much 
nore is involved than distributing benefits universally or selectively. The same 
:hing is true of the issue of public schools, which at first glance appears to provide 
1 fertile field for the application of the selective principle. Even if the state 
Nithdrew all its indirect subsidies to the public schools-in the form of tax 
~xemptions and tax relief-public schools would still be with us and all simple 
;olutions for " integrating " them into the state system raise as many questions as 
hey resolve. 
student grants in higher education 
itudent grants in higher education conform in essence to the principle of selectivity, 
nasmuch as the value of the grant declines with the taxable income of parents. 
rhe fact that the parental contribution is means-tested suggests straightaway that 
he purpose of the grants system is to assist the less affluent to keep their children 
I' full-time education after 18. In short, its purpose is to "equalise educational 
>pportunities" in the face of unequal means to postpone employment. If all that 
vere required for higher education were finance after the age of 18, the system 
vould succeed admirably in achieving its central objective. Unfortunately, what 
s also required is two or three A-level passes and this implies full-time attendance 
n school between the ages of 15 and 18. Although educational maintenance 
Lllowances are available beyond the statutory leaving age, in practice these are 
~iven to only a minute fraction of the relevant age group, and almost never exceed 
~70 per child. Furthermore, as the Robbins report demonstrated, the fraction of 
miversity students from manual working-class homes has remained at 25 per cent 
)f university intake ever since 1938, whereas the present system of grants was only 
ntroduced after the last war. I will not now rehearse the rest of the argument. 
niversalists, about the appropriate scale of higher education, the particular 
method used to select children for admission to higher education and at what 
1ge to begin to do so, the educational and social effects of streaming in secondary 
;chools, and the desirability of keeping children off the labour market until 16 
·ather than 15. Moreover, one may take a position on these questions in principle 
md yet view it quite differently in practice, given the present supply of teachers 
wd distribution of school buildings. From almost every point of view, compre-
llensive reorganisation, streaming, secondary school-leaving examinations, and the 
;tatutory leaving-age are much more important issues than that of means-testing. 
However, they are not issues of which an economist can speak with authority. 
fhis is not to deny that, say, comprehensive secondary schools would constitute 
1 much more substantial selective benefit to working-class parents than cheap 
;chool meals, nor that the £100 million we would have spent in the next few years 
n preparation for raising the school-leaving age in 1971 would not have been spent 
;electively on poorer areas and understaffed schools, but simply that so much 
nore is involved than distributing benefits universally or selectively. The same 
:hing is true of the issue of public schools, which at first glance appears to provide 
1 fertile field for the application of the selective principle. Even if the state 
Nithdrew all its indirect subsidies to the public schools-in the form of tax 
~xemptions and tax relief-public schools would still be with us and all simple 
;olutions for " integrating " them into the state system raise as many questions as 
hey resolve. 
student grants in higher education 
itudent grants in higher education conform in essence to the principle of selectivity, 
nasmuch as the value of the grant declines with the taxable income of parents. 
rhe fact that the parental contribution is means-tested suggests straightaway that 
he purpose of the grants system is to assist the less affluent to keep their children 
I' full-time education after 18. In short, its purpose is to "equalise educational 
>pportunities" in the face of unequal means to postpone employment. If all that 
vere required for higher education were finance after the age of 18, the system 
vould succeed admirably in achieving its central objective. Unfortunately, what 
s also required is two or three A-level passes and this implies full-time attendance 
n school between the ages of 15 and 18. Although educational maintenance 
Lllowances are available beyond the statutory leaving age, in practice these are 
~iven to only a minute fraction of the relevant age group, and almost never exceed 
~70 per child. Furthermore, as the Robbins report demonstrated, the fraction of 
miversity students from manual working-class homes has remained at 25 per cent 
)f university intake ever since 1938, whereas the present system of grants was only 
ntroduced after the last war. I will not now rehearse the rest of the argument. 

(See M. Blaug's "Loans for students," New Society, 4 October 1966) Suffice it 

to say that all the evidence goes to show that the place to remedy unequal 

educational opportunities is in the primary and secondary schools-possibly, by 

spending on "educational priority" areas and by comprehensive reorganisation 

-and that if we are going to apply finance to bring more working-class students 

into higher education, the time to do it is, first, between the ages of 15 and 18, , and only then after the age of 18. 

It is worth pointing out that, under present arrangements, the raising of the school-

leaving age to 16 will constitute a tax, as it were, on those parents who cannot 

afford or believe they cannot afford to do without the earnings of their 15-year-old 

children. That is to say, the real cost of raising the school-leaving age will be 

argely borne by working-class parents. I know of no proposals to compensate 

them for the loss. 

Needless to say, it would be pleasant to do both, but the Plowden recommendations 
taken together would entail extra spending of £40 million in 1970-71, and student 
grants in higher education are already running at £100 million and may be 
expected to rise to about £125 million by 1971, even if they are not increased in 
proportion with the cost of living. ("Student support," Trends in education 8, 
October 1967) As a matter of fact, student grants now correspond in order of 
magnitude to family allowances and war pensions. Clearly, if one is serious about 
the objective of equalising opportunities, one cannot advocate doing both. And 
yet there is no doubt that lack of student aid in higher education would, to some 
extent, discourage working-class students from staying on after 18, even if there 
were grants between 15 and 18. The solution is student loans in higher education, 

\ 

or some combination of grants and loans, beginning with loans for postgraduates 
and then gradually extending downwards. The case for this looks better when 
combined with grants for fifth and sixth formers, but it can be argued on its own 
grounds. 

The favourite objection to student loans is the "negative dowry" argument : 
women graduates who married and ceased working would saddle their husbands 
with a negative dowry. Likewise, graduates who entered teaching or other low-
paying occupations would be at a severe disadvantage compared to the rest. This 
objection wins the argument by inventing a straw man. The scheme that several 
economists advocated in their evidence to Robbins was one in which repayments 
would be tied to earned income as revealed by PAYE, that is, an element of direct 
subsidy would remain for graduates leaving the labour force or going into low-paid 
jobs. Perhaps, it would have been better if this had been labelled. not a loan 
scheme, but a system of taxing graduates at a progressive rate, for this is in fact 
what is meant. 


[t is sometimes asserted that graduates are already taxed progressively in\ 
consequence of their relatively higher incomes, that is, they are repaying the state 
for the cost of their education and the grant they once received was, in fact, in 
the nature of a repayable loan. But this is a completely specious argument. We 
introduced the progressive income tax in the 19th century, long before we thought 
of student grants, because we objected to the distribution of income generated by 
the market mechanism. In this century, we begin to subsidise higher education by 
making maintenance grants. The tax which graduates pay on their undeniably 
higher earnings is not an adequate quid pro quo for the subsidy and was never I 
designed to be such. Besides, if we were to accept this type of argument, we 
ought to advocate the distribution of free annuity policies to all 18-year-olds, on 
the grounds that part of the annual payments would, after all, be recovered via 
the progressive income tax. 

Deprived of the straw man, the chief lobby for the existing grants system, the 
National Union of Students, has recourse to the argument that loans would not 
only deter working-class students from entering higher education, but would also 
encourage vacation work and part-time study while earning; this would raise 
failure rates and lengthen the university course, thus raising the cost to the 
country in producing a qualified graduate. The fact that the NUS is apparently 
concerned to minimise the costs of university education is worth noting. A loans 
scheme, or rather a tax on graduates, would begin to yield considerable savings in 
three or four years. It is true that it might foster a tendency toward part-time 
higher education and a longer degree course. The effects of this on costs, however, 
might be offset by more students living at home. At any rate, one could argue 
that the growth of vacation employment and part-time education, and even a 
lengthening of degree courses,..,would ffinfer c\'nsiderable advantages on students, 
particularly on those from low:ini'brri~ f;ffi'rti'e'S: Furthermore, students would have 
the option of refusing the loan, thereby avoiding tax later, or of accyptu}g part 
of or all of the loan with consequent tax implications after they s~rt working. 
Those who wanted it could achieve complete financial independenct from their 
parents, a possibility which I would have thought the NUS ought toAavour. I have 
some difficulty in discovering any logical thread in the arguments of students about 
grants, except that of " not taking from us that which we have." For a perfect 
example, see the letter against student loans in the New Statesman of 30 June 
1967; signed by a variety of student organisations at Oxford University, including 
the Labour Club, the Liberal Club, the Conservative Association, the Communist 

Club, the Student Council, and the Union Society. 

The strongest argument for a graduate tax is that it would permit an increase in 

fees, perhaps to the extent of covering most of the cost of teaching additional 

students. If the " grant " were then paid to students instead of to institutions, the 


consequence would be that the entire system of higher education would become 
more flexible and responsive to the demand from students and their families. 
Universities would have an incentive to expand, whereas under present arrangements 
every additional student increases their dependency on public funds, and 
they would have an incentive to diversify their courses in the effort to appeal to 
students with different tastes, interests and needs. Fees might vary considerably 
between universities and so might entry standards, but universities would broadcast 
these differences in the effort to compete for students, instead of hiding them as 
they now do. What would emerge is something like comprehensive higher 
education to matoh comprehensive secondary education. (This paragraph summarises 
a brilliant anonymous article on "University Finance: Should Students 
Pay?", New Sociey, 22 June 1967). And think of what it would do to the cause 
of " student power? " 

I have left to the last another popular argument against student loans, namely, 
that it would encourage "brain drain." All the evidence in this country shows 
that graduates not only enjoy higher lifetime incomes than non-graduates, but 
more than sufficient to yield a handsome return on the direct and indirect costs 
that they have incurred to attend higher education. Nevertheless, by going to 
America they can do even better. If they paid the full costs of their own education, 
there might still be some national loss from brain drain, although it is doubtful. 
But as long as we heavily subsidise higher education, there is almost certainly 
a national loss from brain drain . In other words, concern about brain drain 
strengthens the case for loans rather than grants. This is not the way the argument 
is usually put. On the contrary, the possibility of emigration is said to make a 
loan scheme administratively unworkable and, indeed, it is alleged that the debt 
burden would stimulate brain drain. 

It would be very simple to devise an administrative arrangement short of a police 
state to tax British graduates working abroad. In practice, the only two countries 
that matter are Canada and the United States. We already have bilateral agreements 
with both countries to force British nationals residing there to pay surtax 
owed to the Inland Revenue. We need merely to extend the same principle to 
work permits given by the Canadian and American governments to British 
graduates working in Canada and the USA: failure to pay the graduate tax then 
leads to withdrawal of the permission to work. The Jones Report on Brain Drain 
rejects the idea of student loans in a single paragraph on the grounds that we 
cannot expect " other nations to pursue civil debts on our behalf." (Report of the 
Working Group on Migration, Cmnd 3417, para 136, HMSO, 1967) But the power 
to withdraw passports alone might suffice to guarantee repayment of loans; after 
all, it does take five years to become an American citizen. Furthermore, if we were 
interested in reducing brain drain, a loans scheme would provide an almost perfect 


'lStrument for controlling it, without interfering with the right to emigrate. The 
)ans would carry interest charges, presumably at subsidised rates, which would be 
1mbodied in the calculation of the graduate tax. We might remit all interest 
harges on graduates working at home, while levying them only on graduates 
vho go to work abroad. If this had too little effect, we could simply raise the 
;raduate tax on emigrants. I am not recommending a tax on brain drain but 
imply suggesting the manifold policy uses of a graduate tax. 

~ducational vouchers 

close with a reminder of the earlier distinction between selectivity within the 
tate sector and selectivity pure and simple without any connotation about public 
,r private provision. The Institute of Economic Affairs has long been urging a 
ystem of vouchers for people with relative low incomes and large families with 
vhich they could pay, not only school fees, but medical fees or medical insurance, 
·ents or mortgage payments, and premiums on life insurance with pension options. 
>eople would be free to add to the value of these vouchers as they wished and the 
,tate, besides setting minimum standards and perhaps minimum levels of purchase, 
¥ould simply compete in the market with other producers of services. The idea 
s that we need, not the welfare state, but simply more equal means to purchase 
.velfare from whomsoever provides it. A voucher scheme could be made as 
:qualising as we liked by scaling the value of the voucher inversely to income, 
Jut the principal effect in any case would be to stimulate the growth of private 
;chools, private hospitals, private medical insurance, private housing, private 
Jension schemes, and the like. The idea is so radical that one can hardly begin to 
tssess its probable consequences. 

[ have tried to canvass the possible implications for primary and secondary 
~ducation in "Economic Aspects of Vouchers for Education," Education: A 
ri'ramework for Choice. (Institute of Economic Affairs, 1967) 

[s there anything to be said for trying a voucher scheme in secondary education in 
:wo or three LEAs for a few years? Is this simply the selective pattern carried to 
its logical conclusion, or is it selectivity gone mad? 


5. how far is selectivity
necessary in education? 
H. D. Hughes 
At least since 1944, the British nation has been committed, as a major social 
priority, to the establishment of a democratic education system which would 
provide equality of eduoa:tional opportunity according to "age, ability and 
aptitude." The 1944 Education Act committed all parties to the goals of compulsory 
full-time education for all from five to 16, and compulsory part-time 
education to 18. Outside these ages, it is recognised that nursery schools or classes 
would be beneficial for many, and that a much higher proportion should be in 
full-i!:ime higher or .further education for varying periods a·fter the statutory 
leaving age. There should also be adequate provision for adult education for all 
who can be encouraged to participate. A comprehensive educational system 
catering for all these needs is required in the interests of society as well as of the 
individual citizens. 

A quarter of a century later, we are faced with the problem of how to obtain an 
adequate proportion of the national resources to achieve these desirable ends, in 
competition with the other demands of public and private expenditure. By 1968 
education was already accounting for ~2 per cent of all public expenditure, 
including two-fifths of the current expenditure of local authorities, and yet school 
building programmes were far from meeting the needs, teachers were underpaid 
and classes were overcrowded, the proportion of young people in full-time 
education after 15 lagged far behind most other developed countries, and the 
provision for nursery and adult education was ludicrously inadequate. The 
limitations on expansion were both physical and financial. Hence the argument 
about " selectivity," sparked off mainly by those who disliked the ideals of 
educational equality, but later taken up by others who were forced to face the 
argument that, given lagging economic growth, priorities had to be established. 
The discussion on selectivity has tended to become confused between a number of 
separate, though related issues, particularly in the education field. "Universalism " 
in education clearly does not involve provision of identical facilities for all. Certain 
educational services such as schools for handicapped children, nursery schools, 
boarding schools, graduate and post-graduate courses are only required by special 
categories. Some of these, such as handicapped children, are categories of special 
need; others, 'Such as boarding schools and post-graduate education, involve an 
element of personal preference and possible "privilege." Some services are 
required by all, but some groups have exceptional needs, as the Plowden report 
indicated in its chapters on educational priority areas and immigrant children, 
and in its advocacy of "positive discrimination". Selecting a limited number for 
post-school education involves additional expenditure on them, according to a 
mixture of need, motivation and merit. 

Questions such as these, of different needs, desires and merits, have become 
intermingled with the problems of finance on the one hand, and of the nature of 


1e providing agencies on the other. Should the state provide for all these differing 
eeds out of the general system of rates and taxes, or should the " consumer " 
e asked to make a contribution, either on a flat rate or a graded scale, as in the 
1se of university awards? Should there be discrimination between UK residents 
nd those from overseas? Even more controversial, should there be a unified 
jucational system, or should some be allowed to " contract out " to private 
jucational establishments, and even encouraged to do so by relieving them of 
ll or some of their contributions to the public system by tax concessions or some 
ind of " voucher system." Both in theory and in practice, a good deal of confusion 

~igns. 

1 a socialist utopia, the problem would be simple of resolution. There would be 
n adequate supply of educational facilities to meet the varying demands. Wealth \ 
nd income would be reasonably distributed, and either all services would be free 
r all citizens might make a modest contribution within their means towards the 
ost of the services they consumed. How far can we hope to progress in this 
irection in Britain? The crux of the matter lies in the extent to which we can 
ersuade the electorate to expand public social expenditure or "the social wage" 
1 relation to private expenditure. Given economic growth, this would of course 
e infinitely easier to achieve-indeed the assumption of the Labour government 
as been that this is the essential pre-requisite to social advance (see R. H. S. 
:rossman, "Socialism and planning," Socialism and affluence, Fabian Society, 
967) Can, however, nothing be done in the form of redistribution of existing 
!sources? 

'ogether with Titmuss, Abel-Smith and Townsend, I believe that something 
ignificant could be achieved in this respect. We have allowed the myth to be 
reated that this country is overtaxed and being crippled by the demands of the 
relfare state, when in fact in recent years the proportion of personal consumption 
1 this country has been higher than that in W. Germany, the Netherlands, USA, 
r Sweden; and the proportion of government civil expenditure has been lower 
1an the average of the Common Market countries or the OECD (Europe), as shown 
1 the table overleaf. 

iovernment civil consumption in these years took 10.8 per cent of the gross 
ational product, and personal consumption 64.6 per cent, compared with Swedish 
gures of 14.4 per cent and 57.1 per cent respectively. Clearly there is some 
:::ope for redistribution here. 

\.S for personal taxation, "for the first £10,000 of income the UK average rate of 

l.X is exceeded by Germany, Sweden and the Netherlands," though above £10,000 
~ritain has an undisputed lead. (G. Polanyi, The Times, 25 October 1967). £10,000 

GOVERNMENT EXPENDITURE AND PERSONAL CONSUMPTION 
1963-65 average percentages 

total personal 
country defence civil government consumption 

Sweden 5.9 18.9 24.8 75.2 
USA 9.9 12.7 22.6 77.4 
Netherlands 21.2 78.8 

W. Germany 5.6 15.5 21.9 78.9 
UK 7.1 13.3 20.4 79.6 
EEC (total) 5.2 13.9 19.1 80.9 
OECD (Europe) 5.4 13.6 19.0 81.0 
source: The Times, 18 May 1967. 

net is the effective ceiling income for a taxpayer in this country (gross salary 
£50,000) leaving out questions of evasion and avoidance and fringe benefits. This is 
some thirteen times the minimum gross wage of £15 per week that the TUC is 
endeavouring to establish over a period for an adult male worker. Is there no 
room for redistribution here? There is also the question of redistribution of 
wealth: 10 per cent of the population owned 88 per cent of total net personal 
capital in 1936 and 83 per cent in 1960, a shift of 5 per cent in a quarter of a 
century. The TUC in their Economic Review 1968 estimated -that a wealth tax of 
3 per cent on property above £20,000 would probC~~bly yield about £1,000 million 
per annum, though clearly this would not all be available for current purposes. 
Roy Jenkins's "special charge" on investment income above £3,000, calculated 
to bring in £100 million, is a mild genuflection in this direction, and it is to be 
hoped that he will follow up his promise of further exploration of the problem. 

Even on current estimates of economic growth, therefore, a determined policy of 
redistribution of resources in favour of public social expenditure, to be met out of 
taxation, could provide room for expansion. The same may be true of local 
government finance if the report of the Royal Commission results in the radical 
overhaul of the structure and finance of local authorities, and makes possible, for 
example, a system of local income tax to relieve the regressive rating system. 
Failing this, educational expansion requires a further transfer of expenditure from 
local to national finance. Teachers' salaries and university awards account for 
large blocks of expenditure which are nationally determined and could well be 
nationally financed, even if the detailed administration were left to local education 
authorities. 

The current mood of defeatism about expanding social service expenditure is 
therefore to some extent unjustified and must be overcome. It is the cause of much 


)f the discussion on selectivity. Another major cause is, however, one of philosophy 
ather than finance. This is best illustrated in the educational field in the arguments 
Lbout the private sector, notably the public schools. Is it right or wrong in 
>rinciple that those who can afford to do so should withdraw from the "univer-, 
alist" state system and provide for their own needs? In my view this lies at the 
oot of the class division in British society and any socialist movement worthy of 
he name must seek to establish a unified comprehensive system. Only in this way 
:an equality of opportunity be made a reality. This is not the place to argue the 
:ase iA detail. Suffice it to say that the present system of income tax allowances 
.nd tax concessions to educational charities provides substantial assistance to the 
vealthy to enable them to purchase educational privilege, and should be terminated. 

\ny proposals from the Newsom commission to make further public funds 
,vailable to selected pupils attending private education institutions should be 
trongly resisted unless these bodies can be thoroughly integrated in a compretensive 
system based on selection according to need, and effectively under public 
:ontrol. A voucher system designed to perpetuate a dual system would indeed be 
.electivity gone mad! The limited resources of capital expenditure, current 
:ducational finance, and qualified personnel, must be devoted to the expansion 
>f a unified educational structure, providing legitimate freedom of choice within 
he public system. The lack of enthusiasm for increased public expenditure on 
:ducation stems largely from the encouragement given to wealthy and education.
lly conscious parents to contract out of the state system rather than devoting their 
:nergies to demanding its improvement. American experience has shown only too 
:!early that the idea of "separate but equal" institutions with parity of esteem 
s an illusion. Class segregation is as pernicious as racial segregation in a demo:
ratic society . 

.-et me now turn to the two important "selectivity" questions posed by the 
>lowden report, which have wider implications. First the question of educational 
>.riority areas and "positive discrimination." To date, there is little doubt that 
mr educational system, intentionally or unintentionally, has provided positive 
liscrimination in favour of the middle class. Crowther, Newsom, Robbins, 
)ouglas's Home and School, all provide overwhelming evidence to this effect. 
~ewsom schools predominate in decaying working-class areas, the provision of 
;rammar school places is higher in middle-class communities, a higher proportion 
>f middle-class children stay on beyond the compulsory leaving age and enter 
tigher education. Per capita expenditure increases at each stage of the system. 
)election systems inevitably favour those from comfortable educated homes. 
>ositive discrimination in favour of deprived areas, including priority building 
>rogrammes, preferential teaching ratios and salaries, are required not only at 
>rimary level to establish equality of opportunity within a "universal service." 


It is good that a start, however inadequate, has been made in this direction. This 
is a form of group selectivity which is wholly desirable. 

The second Plowden selectivity problem relates to the question of nursery 
education. The report advocated provision of places for 15 per cent of children, 
with priorities according to need. A minority vote of reservation, tinged with a 
deep tone of pessimism, recommended parental contributions of Ss per half day 
with remissions of charges for "families with low income or several children," on 
the grounds that the necessary resources would not otherwise be forthcoming. 
They admitted that " some parents who cannot afford to pay may be too proud 
to accept remission and therefore keep their children away," but hoped "new 
traditions can be created." Clearly there would have to be an income scale-let us 
hope it would be a national scale rather than adding to the chaos of local authority 
scales as described by Mike Reddin. The additional expenditure involved is 
estimated at less than £50 million per annum-the minority note gave no estimate 
of rthe cost of adminis·tering an additional income scale. Professor Titmuss' 
devastating article "The practical case against the means test state" (New 
Statesman, 15 September 1967), related to the fluctuating nature of working-class 
income and the " administrative nightmare" involved in equitable means tests, is 
in no way answered by Mark Blaug. Any qualified case-worker could tell him how 
to select those in need of this social benefit, irrespective of income. If a mother 
does earn extra income because her child is in a nursery school, as the Plowden 
minority feared, that income will be taxed. She will be adding both to the national 
income •and to the inland •revenue receipts. 

Nursery education, before the compulsory age, raises in some ways similar 
problems to those involved in financing education beyond the school-leaving age 
for a proportion of the population. Do we as a nation regard it as a social good 
that the proportion in full-time higher and further education should increase, and 
that the basis of selection should be motivation and merit rather than ability to 
pay? If so, how do we raise the money for an adequate system of maintenance 
allowances for those staying at school beyond the statutory age and for students 
in post-school education? Given our unequal distribution of income and wealth, 
and the resistance to higher direct taxation, there is a case for an income scale of 
contributions in administering student grants. This is in effeot ·one method of 
attempting to re-adjust the social imbalance of higher educavion in the past. At 
present we subsidise university education by charging uneconomic tuition fees, 
whilst residential charges and personal needs are covered by income tested grants. 
now admittedly falling behind the increase in the cost of living, owing to unjustifiable 
meanness on the part of the Department of Education and Science. There is 
no logical case for rhis parsimony. Clearly a grant, to be effective, must be adequate 
to cover the need for which it is supposed to cater. The Robbins report wanted 


45 
o raise fees to 20 per cent of institutional expenditure. If the fees are in any case 
:overed by grants this may have some relevance to academic freedom, but very 
ittle to the general problem of raising educational resources. Robbins, however, 
;trongly opposed the idea of raising fees to cover the full cost of particular 
nstitutions or courses. Courses in science and technology no doubt cost more to 
Jrovide than those in the classics or history--do we really want "market forces " 
.o provide additional deterrents to students choosing the former? Do we want 
nstitutions competing with each other to provide cut-rate courses, as though 
education was a kind of soap powder? Admittedly, this may be one of the 
epartment's undeclared objectives in supporting the binary system, but they 
..vould be ashamed to admit it openly. 
fhe economists, however, have made the great discovery that higher education 
.ends to benefit not only society but also the individuals receiving it. If there is a 
;;alculable return in the form of future earnings, they argue, why should not these 
be taxed? Some form of loans system might assist future taxpayers, even if it 
provided little immediate relief to the exchequer. There is, of course, a fundamental 
:listinction between a loans scheme and a graduate tax, though Mark Blaug seems 
to confuse the two. In principle, a loan would be related to the cost of the course 
not met by public funds or paid for at the time; a tax to the post-graduate earnings. 
A tax would appear more equitable, as its incidence could be progressive, and 
related to the presumed benefits. But graduates earning higher incomes are, of 
course, already taxed in respect of these-why impose on them a further tax which 
a "self-made man" earning an equivalent salary would not pay? The straw man, 
and straw woman, are in fact very real. There is the well-known story of the man 
who was refused the post of lavatory attendant on the grounds that he was 
illiterate. Subsequently he made his fortune at the rag and bone trade, and when 
asked the secret of his success replied "illiteracy." He would clearly not be 
expeoted to pay a "graduate tax." 
A loan scheme, on the other hand, as an alternative to grants, would obviously be I 
socially regressive. Students from poor families would be saddled with repayment 
obligations from which the wealthy would escape. As a supplement to grants it 
might just be tolerable in certain circumstances, but the National Union of Students 
are clearly on firm ground when they argue that its existence would be likely to 
be used as an argument to reduce expenditure on grants. (No to Loans, NUS, 
November 1967). I prefer to accept the logic of the ~obbins report: " On balance 
we do not recommend immediate recourse to a system of financing students by 
loans. At a time when many parents are only just beginning to acquire the habit 
of contemplating higher education for such of their children, especially girls, as 
are capable of benefiting by it, we think it probable that it would have undesirable 
disincentive effects." 
45 
o raise fees to 20 per cent of institutional expenditure. If the fees are in any case 
:overed by grants this may have some relevance to academic freedom, but very 
ittle to the general problem of raising educational resources. Robbins, however, 
;trongly opposed the idea of raising fees to cover the full cost of particular 
nstitutions or courses. Courses in science and technology no doubt cost more to 
Jrovide than those in the classics or history--do we really want "market forces " 
.o provide additional deterrents to students choosing the former? Do we want 
nstitutions competing with each other to provide cut-rate courses, as though 
education was a kind of soap powder? Admittedly, this may be one of the 
epartment's undeclared objectives in supporting the binary system, but they 
..vould be ashamed to admit it openly. 
fhe economists, however, have made the great discovery that higher education 
.ends to benefit not only society but also the individuals receiving it. If there is a 
;;alculable return in the form of future earnings, they argue, why should not these 
be taxed? Some form of loans system might assist future taxpayers, even if it 
provided little immediate relief to the exchequer. There is, of course, a fundamental 
:listinction between a loans scheme and a graduate tax, though Mark Blaug seems 
to confuse the two. In principle, a loan would be related to the cost of the course 
not met by public funds or paid for at the time; a tax to the post-graduate earnings. 
A tax would appear more equitable, as its incidence could be progressive, and 
related to the presumed benefits. But graduates earning higher incomes are, of 
course, already taxed in respect of these-why impose on them a further tax which 
a "self-made man" earning an equivalent salary would not pay? The straw man, 
and straw woman, are in fact very real. There is the well-known story of the man 
who was refused the post of lavatory attendant on the grounds that he was 
illiterate. Subsequently he made his fortune at the rag and bone trade, and when 
asked the secret of his success replied "illiteracy." He would clearly not be 
expeoted to pay a "graduate tax." 
A loan scheme, on the other hand, as an alternative to grants, would obviously be I 
socially regressive. Students from poor families would be saddled with repayment 
obligations from which the wealthy would escape. As a supplement to grants it 
might just be tolerable in certain circumstances, but the National Union of Students 
are clearly on firm ground when they argue that its existence would be likely to 
be used as an argument to reduce expenditure on grants. (No to Loans, NUS, 
November 1967). I prefer to accept the logic of the ~obbins report: " On balance 
we do not recommend immediate recourse to a system of financing students by 
loans. At a time when many parents are only just beginning to acquire the habit 
of contemplating higher education for such of their children, especially girls, as 
are capable of benefiting by it, we think it probable that it would have undesirable 
disincentive effects." 

Labour Britain has little enough to boast of in international comparisons of social 
progress. Shirley Williams has been able to quote with pride the proportion of 
university students of working-class origin, studying under a grants scheme 
inherited from the years of "Tory misrule". Are we really to contemplate backsliding 
on this? Over a quarter of our university students are the children of 
manual workers, compared with Sweden 14 per cent, France 8.3 per cent, Western 
Germany 5.3 per cent, largely rhe result of our grants policy (Patrick Gordon 
Walker, The Times, 13 May 1968). In the same article the former Secretary of 
State es·timated that the top practical saving by a loans scheme was £5 million per 
annum, whilst the abolition of parental contributions would cost about £30 million 
per annum. 

I find Mark Blaug's arguments on overseas students and adult education so 
reactionary that I am appalled at their being considered seriously in Fabian circles. 
Grants to overseas students are one of the most fruitful forms of aid to developing 
countries. If " all foreign aid " were extended to governments instead of students 
what would happen for example to the African students from Rhodesia and South 
Africa now studying in this country? Would Mark Blaug prefer them to go to 
Moscow or Peking? What would have happened to Julius Nyerere, or Tom 
Mboya? The government has in fact belatedly recognised the case for assisting 
private overseas students in the new arrangements to be introduced this year. 

Mark Blaug clearly has no time for liberal adult education. Birkbeck has its place, 
but so have extra mural and WEA courses for industrial workers; even those for 
the much despised housewife! Anyone with the least knowledge of adult education 
is aware that it is easier to attract the educationally privileged than the manual 
worker and his wife who tend to regard themselves as rejected by the educational 
system at 15. Do we want to perpetuate the division of this country into two 
cultural nations, or do we seek to build a democracy in which the mass of the 
population can understand and communicate with the experts, be they scientists 
or economists as you will? Our total national expenditure on adult education in 
1956-57 was estimated by the National Institute of Adult Education at £4.6 
million, or 0.659 per cent of public expenditure on education and 0.022 per cent of 
the gross national product. Since then the position has if anything deteriorated. 

Some £1 million extra per annum (capital and revenue) would put adult education 
on its feet. An increase in fee will merely nip some of the buds that are already 
prouting. Does Mark Blaug wish to apply his economic cost analysis also to the 
arts, theatre and opera and the other forms of culture subsidised by the state in 
the face of the criticisms of the Philistines? Can we not " select " certain forms 
of activity that are worthy of encouragement and subsidy, for all who are willing 
to participate in them to their own good and that of society? Or must we be 


·uled by market forces which will undoubtedly favour bingo at the expense of 

Beethoven? 

[n conclusion, let me endeavour to set out the basic principles of a socialist/ 
education policy as I see them. The basic aim must be real equality of educational 
)pportunity according to need. Need will clearly vary with aptitude. There must 
oe variety of provision within a unified education system. In any given case, the 
~hoice of the appropriate institution and length and nature of course of study 
)hould be determined on educational and social grounds alone, and the financial 
resources of the student and his family should be irrelevant. This means that the 
state must in its educational policy seek to counterbalance the inequalities which 
:~.rise from the maldistribution of incomes and wealth in society, and also those 
which arise from the educational inequalities of the past, reflected in the wide 
jifferences of parental education and attitudes to education. 

" Positive discrimination" is therefore necessary in favour of children from 
educationally underprivileged homes and areas, not only at primary level but 
throughout the educational system. 

To achieve this, a unified educational system under public control is essential. 
The essence of private schools and institutions is that they aim to provide 
preferential treatment and privilege of one kind or another. Parental willingness to 
pay fees, or manipulate vouchers, is inextricably linked with this. Fees or vouchers 
are tools at the disposal of the educationally conscious section of society to be 
used to preserve or strengthen its already preferential position. The aim of a 
socialist educational policy is diametrically opposite, and must inevitably restrict 
parental choice in the interests of social cohesion and of justice for the underprivileged. 
There may have to be compromise in implementing this aim in practice, 
but the principle is clear. Any policy which would have the effect of strengthening 
the private sector of education must be resisted as inevitably encouraging 
educational apartheid! 

Given these principles, the problem is how to secure the necessary resources. What 
we are faced with is the education and provision of maintenance for the whole 
population for ten to 15 years of its life span. During the period of compulsory 
schooling, provided free by the state, families can be expected to meet the full 
costs of maintenance. Outside that, whether in nursery school or university, given 
current economic and educational inequalities, the majority cannot. If fees must 
be charged, they should be kept down to a level at which they do"'lpot act as a 
deterrent, and it then becomes a ,. 

question of whether the administrative costs 
involved in collection justify their imposition. If we regard education as a public 
investment good rather than a private consumer good there is a strong ca·se for 


the elimination of fees wherever practicable. If the state provided free education 
at all stages, can families be expected to contribute to maintenance? Given the 
inequalities of income and the inadequacies of our taxation and rating system, 
maintenance grants linked with an income scale are probably inevitable and 
compatible with socialist aims. The scales should be reasonably generous, and 
there should be national uniformity. They should cover pre-compulsory school 
education and all full-time education after the school-leaving age, whether at 
school or college. To overcome the difficulties experienced by many students in 
obtaining the parental share of their standard allowances, the parental contributions 
should be made payable to the school or college for transfer to the pupil. 
In cases where the college failed to secure the parental contribution, a loan scheme 
might be justified, but only as a last resort. An optional loan scheme for the 
progeny of mean members of the middle class is far less objectionable than one 
imposed by force of circumstances on the deserving poor! Similarly, the current 
DES policy frowning on loans to students who have failed their examinations and 
wish to extend their courses might well be reconsidered. 

I come to this conclusion about income scales with some reluctance, faced with 
the hard economic and political realities of the present period. As the achievement 
of economic growth relieves these pressures it is clearly necessary that more 
adequate resources be made available for our educational needs. 6 per cent of 
the national income is clearly inadequate to provide for ten to 15 years of the 
average person's life. As we begin to produce a more educated people, our social 
priorities should become clearer, and the understanding of the " social wage " 
increase. We may progress towards a more equitable distribution of wealth and 
inoome. Vouchers, loans, fees, and indeed income scales, will be seen to be obsolete 
devices of an imperfect and outmoded social and economic system. Public 
acceptance of enhanced public expenditure on comprehensive communal services 
requires a vast effort of political education. Socialists should be concentrating on 
this instead of seeking to compromise with market forces which are inimical to 
their fundamental objectives. We should have the courage of at least some of our 
convictions! 


. the cost-effectiveness of 
education spending 
31eddyn Davies 
t is widely recognised that much public spending is undertaken without adequate 
:omparison of the yields of different ways of spending the money. There is every 
·eason to suspect that this is as much the case for expenditures on education as 
or spending on other public services. That the machinery of government is not 
n all respects conducive to highly efficient spending decisions is one of the 
Jrincipal raisons d'etre of bodies like the Fulton Committee and the Royal 
::::ommission on Local Government. But the problem is not only one of reforming 
he machinery of government although substantial reforms in this would contribute 
,;ubstantially to better allocation decisions. An appropriate administrative structure 
ioes not by itself lead to good decisions. 
\1anagement techniques have been evolved to assist in the appraisal of alternative 
Jolicies. They incJ.ude systems analysis (the development and application of ana-
ytical tools for aiding resource allocation decisions), performance budgeting, where 
:1.n accounting system (involving non-financial as well as financial indices of 
1chievement and resources) is designed to estimate the resources devoted to 
tchieving an end and which can be used to assess the efficiency with which the 
~nds have been achieved or the degree to which actual performance differs from 
~xpected performance; operational research, which brings to bear a wide range 
)f skills and techniques in searching for the optimal use of resources (generally 
mce the major strategic decisions have been made): and cost-benefit analysis, 
;vhich attempts to estimate rates of return on public investment. Cost-benefit 
malysis is generaJiy used where there are important divergences between private 
md social costs and benefits-differences between the costs and benefits to the 
dividual decision-maker and to bhe community as a whole, where the role of the 
~ompetitive ma11ket is severely ·circumscribed, and wlhere the returns on expendi-
:ure are enjoyed over a long period of time. 
fheir use in services like education is more limited by the absence of essential 
nformation and by some of the characteristics of the services which makes 
raluation problems difficult than by their degree of appropriateness or weaknesses 
n their theoretical foundations. However the difficulties are such that the tech-
liques themselves provide no panacea. But the approach common to the more 
;ophisticated management aids is invaluable. In particular, it is inlportant to make 
t clear statement of objectives, to organise data to measure ·the attainment of 
hese objectives and the use of resources in doing so, and to apply mathematical 
tnd statistical techniques to these areas. 
. the cost-effectiveness of 
education spending 
31eddyn Davies 
t is widely recognised that much public spending is undertaken without adequate 
:omparison of the yields of different ways of spending the money. There is every 
·eason to suspect that this is as much the case for expenditures on education as 
or spending on other public services. That the machinery of government is not 
n all respects conducive to highly efficient spending decisions is one of the 
Jrincipal raisons d'etre of bodies like the Fulton Committee and the Royal 
::::ommission on Local Government. But the problem is not only one of reforming 
he machinery of government although substantial reforms in this would contribute 
,;ubstantially to better allocation decisions. An appropriate administrative structure 
ioes not by itself lead to good decisions. 
\1anagement techniques have been evolved to assist in the appraisal of alternative 
Jolicies. They incJ.ude systems analysis (the development and application of ana-
ytical tools for aiding resource allocation decisions), performance budgeting, where 
:1.n accounting system (involving non-financial as well as financial indices of 
1chievement and resources) is designed to estimate the resources devoted to 
tchieving an end and which can be used to assess the efficiency with which the 
~nds have been achieved or the degree to which actual performance differs from 
~xpected performance; operational research, which brings to bear a wide range 
)f skills and techniques in searching for the optimal use of resources (generally 
mce the major strategic decisions have been made): and cost-benefit analysis, 
;vhich attempts to estimate rates of return on public investment. Cost-benefit 
malysis is generaJiy used where there are important divergences between private 
md social costs and benefits-differences between the costs and benefits to the 
dividual decision-maker and to bhe community as a whole, where the role of the 
~ompetitive ma11ket is severely ·circumscribed, and wlhere the returns on expendi-
:ure are enjoyed over a long period of time. 
fheir use in services like education is more limited by the absence of essential 
nformation and by some of the characteristics of the services which makes 
raluation problems difficult than by their degree of appropriateness or weaknesses 
n their theoretical foundations. However the difficulties are such that the tech-
liques themselves provide no panacea. But the approach common to the more 
;ophisticated management aids is invaluable. In particular, it is inlportant to make 
t clear statement of objectives, to organise data to measure ·the attainment of 
hese objectives and the use of resources in doing so, and to apply mathematical 
tnd statistical techniques to these areas. 

school meals and the level of the school meals subsidy. The questions are 
important both because a substantial proportion of public expenditure on education 
services is devoted to school meals, and because policy errors in this field are 
likely to have most serious and cruel effects on families' welfare. The revenue 
account subsidy was of the order of £73 million in 1965-66 and £89 million in 
1966-67. This was the equivalent of just under one-fifth of current expenditure on 
·primary and secondary schools. Capital expenditure on school meals and milk 

. was £9.8 million in 1965-66, the equivalent of 9 per cent of (other) capital expenditure 
on primary and secondary schools. As the proportion of children on the 
register taking meals continue to rise, and more schools are unable to meet 
the demand because of shortages of eating space and kitchen capacity, so will the 
quantity of resources and, almost certainly, the proportion of the expenditure 
devoted to children of school age, increase. (For some crude estimates of the 
quantities involved now and in the future, see Bleddyn Davies and Michael 
Reddin: School Meals and Plowden, New Society, 27 May 1967, and Bleddyn 
Davies and Valerie Williamson, "Some Causes of the Variation in the Uptake of 
Sohool Meals," Quarterly Journal of Social and Economic Administration, March 
1968.) 

·The principal function of the service is to prevent malnutrition caused by child 
poverty. It was clearly stated to be so by the policy-makers of the war and early 
post-war years. Thus, for instance, the level of family allowances was fixed at five 
shillings rather ·~han eight shillings because it was assumed that such services as 
school meals would soon become free and universally available (Hansard, 29 July 
1943, col 2023) It was expected that there would be sufficient facilities available 
and bhat some 75 per cent of pupils would take school meals by mid-1947----<an 
optimistic assumption since this proportion has not yet been reached (Hansard, 
27 January 1944, col 1149). Ministerial and other speakers in the debates stressed 
how important the service was in the fight against malnutrition. It was also 
conceived of as an opportunity for social training and for improving school morale. 
Some of the claims made for it now sound a trifle exaggerated. For instance, a 
parliamentary secretary to the minister of education claimed that the consumption 
of meals would encourage " sound feeding and personal hygiene. Where flowers 
and other decorations are used in the dining room, it helps to develop a sense of 
beauty and it teaches consideration for others and promotes a sound social spirit 
in the school ... as it has in the public schools and at the older universities." 
(Hansard, 2 May 1946, col 333) Few teachers would claim that the present conditions 
in most schools are such that the service has a strong impact of this kind 
on many children. The effectiveness of the service must be judged by its contribution 
to the fight against child poverty, and, more particularly, against child 
malnutrition. The policy issues are whether the service could be adapted so as to 
do this more cost efficiently, and whether more or less money should be devoted 


51 

J the school meals subsidy relatively to services which attempt to meet the same 
eeds. 

Ylost children pay three-fifths of the cost of their school meal, the remammg 
wo-fifths of the cost being met out of public funds. Perhaps 7 per cent of meals 
re served to children who receive their meals free because their family income is 
::>w, and their parents have successfully applied for free meals. This figure of 7 
1er cent is a guess based on the assumption that the day in September on which 
he annual count of receivers is made yields a ratio of payers to free meals 
ecipients which is identical to the annual average. This is tantamount to assuming 
hat factors affecting uptake, notably attendance (which teachers' experience and 
ome quantitative evidence implies is considerably worse for free meals receivers 
han for payers) •and consumption by attenders (which seems 1to be nearer to its 
heoretical maximum among free meals receivers as a group than among payers), 
tave the same impact in September as they have over the year as a whole. 

\ssuming this to be the case, the £73 million subsidy in 1965-66 could be split into 
wo components: one of £13 million being the subsidy to free meals recipients, 
' nd the other of £60 million being the subsidy to children who took meals and 
1aid for them. There can be no questioning the efficiency of the first component 
,f the subsidy, assuming that the diets are well-chosen and the service is run in 
. technically efficient way. Almost all the children enjoying this subsidy are from · 
amilies whose income is below the supplementary benefits level. This component 

~XPENDITURE ON SCHOOL MEALS BY HOUSEHOLD COMPOSITION 
\ND WEEKLY INCOME, 1965 AND 1966 
1965 1966 
average standard average standard 
ousehold composition income ranges (shillings) error (shillings) error 

1 woman, and under £20t 0.80 (0.23) 0.79 (0.19) 
£20-£25 0.99 (0.22) 0.65 (0.19) 
over £25 1.24 (0.18) 1.40 (0.24) 
man, 1 woman, and under £20t 1.70 (0.28) 2.15 (0.40) 
children £20-£25 2.54 (0.44) 2.92 (0.40) 
over £25 2.79 (0.31) 2.96 (0.40) 
man, 1 woman, and under £20t 2.63 (0.40) 3.86 (0.71) 
~ or more children* £20-£25 5.13 (0.65) 3.52 (0.59) 
over £25 4.14 (0.56) 5.25 (0.73) 

' adjusted for differing mean number of children in different income groups. 
· not excluding families one or more of whose children receive free school meals . 
.ource: Ministry of Labour, Family Expenditure Surveys for 1965 and 1966. 


of the subsidy should, in fact, have been of the order of £26-£29 million, sine< 
·probably only two-fifths or a half of those eligible to receive their meals fret 
actually got them (Davies and Reddin, op cit, Ministry of Social Security, Th~ 
Circumstances of Families). 

The incidence, and hence the cost-effectiveness, of the remaining subsidy is no1 
as efficient. The data in the table below <is based on unpublished results from the 
Ministry of Labour's Family Expenditure Surveys for 1965 and 1966. One can 
infer from the table that among smaller families (those with one or two children) 
the probability of receiving a school meal and paying for it is higher, the larger 
the income of the household. The higher the household income, the greater the 
school meals subsidy enjoyed. For these household compositions, the subsidy is 
inefficient. For larger faimilies, the 1966 figures imply that the same may be il:rue, 
but the 1965 figures imply the opposite. 11he data of this table has been 
used to calculate average expenditure per child, and the results are shown in the 
table below. Given household income, expenditure per child is higher the larger 

WEEKLY EXPENDITURE PER CHILD ON SCHOOL MEALS BY 
HOUSEHOLD INCOME AND COMPOSITION, 1965 AND 1966 
average expenditure per 
child (in shillings) 
income ranges household composition 1965 1966 

under £20t 1 man, 1 woman, 1 child 0.80 0.79 
1 man, 1 woman, 2 children 0.85 1.07 
1 man, 1 woman, 3 or more children* 0.87 1.29 
£20-£25 1 man, 1 woman, 1 child 0.99 0.65 
1 man, 1 woman, 2 children 1.27 1.46 
1man, 1 woman, 3 or more children* 1.71 1.17 
over £25 1 man, 1 woman, 1 child 1.24 1.40 
1 man, 1 woman, 2 children 1.39 1.48 
1 man, 1 woman, 3 or more children* 1.38 1.75 

* adjusted for differing mean number of children in different income groups. 
t not excluding families one or more of whose children receive free school meals. 
the household size. In this sense, the subsidy is an efficient one. But the gradient 
of this relationship is no steeper than the positive gradient with income shown in 
the first table. On the whole, therefore, the evidence of the tables implies that the 
second component of the school meals subsidy is not, as the service now operates, 
highly cost-efficient in its incidence on families over the country as a whole. It is 
also inefficient in its incidence on the populations of different geographical areas, 
as is implied by the pattern of variation in the uptake of school meals in 1961 


escribed in appendix 14 of the Plowden Report, and the pattern in 1966 which 
fas analysed in the article published in the Quarterly Journal of Social and 
~conomic Administration in March 1968. The pattern is such that il:he poorer 
.reas have the lowest uptakes, ~he uptake in towns being greatly influenced by the 

•pportunity for women to work. 
:ould the school meals subsidy be made more cost-effective? In a sense, the most 
ost-effective service would be one in which, say, £40 million were spent on free 
oeals for a minority of children qualifying under a very generous eligibility level. 
\part from the objections to such a scheme in principle, it would probably deter 
110re applicants for free meals than does the present scheme which is being run 
n an increasing number of schools in a way that ensures the anonymity of the 

ree meals recipient. In spite of the fact that there are good prospects of having 
. flexible and efficient method of handling information about all families' incomes 
1y the late 1970s involving no more stigma than is now involved in income tax 
Lssessment-if they are being underestimated by some, they have been discussed 
1y others as if such systems would not have enormous problems, not even technical 
mes-they will not exist in the short run. A large increase in the number of 
amilies to be assessed would therefore generate even more arbitrary and inaccurate 
Lssessments. Further, the system would result in a large decrease in the number of 
!inners served, and therefore a waste of capital equipment which would be 
mder-used, and a consequent increase in the cost of each meal. What is needed 
s a medium-run policy that will keep the options open until the 1970s when the 
:omputer's ability at picking out families in chronic poverty and its ability at 
tandling data on short term poverty quickly and accurately will be better explored 
md understood, and when, as a result, we shall be able to operate more complex 
:chemes than are now practicable. Meanwhile, schools in working-class areas 
.hould enjoy a higher proportion of the available capital expenditure. Shortages of 
dtchen capacity should not be made the subject of a political outcry as long as 
hese are a symptom of the diversion of resources to the poorer child, as long as 
he shortages have been as quantitatively small as they have been in all but a few 
treas. and as long as all LEAs give guidance to head-teachers about the rationing 
>f places which favours the poorer child. Most of the LEAs with this problem give 
mch guidance already. Marginal shortages in schools serving prosperous comnunities 
may well result in a better distribution of resources than the creation 
)f high quality and attractive capital for the use of middle-class children accom)
anied by a failure to provide new canteens serving meals that will attract 
~hildren in schools serving poorer children. 

[n such an interim policy, there could be little scope for large price increases. 
W'hile it would not be a cost-efficient way of preventing malnutrition to encourage 
:he proportion of children taking dinners to increase, there would be little real 


saving to the community if canteens were under-used. To keep the existing an 
new resources fully used but not overstrained it would be necessary to raise price 
by small amounts periodically. The policy aim should be to concentrate resource 
on the upgrading of inadequate services ·in poorer areas (with, of course, th 
provision of accommodation as part of new schools) rather than the extension c 
the present service to cover all children. 

This policy would be reasonable under the assumption that there is no mor 
efficient method of achieving the same end. It is probably incorrect to treat th 
school milk service as an alternative to school meals. It has a separate, i 
complementary role to play, particularly for those children who breakfast early o 
inadequately: and, in any case, too little is known about it for any conclusion 
about the incidence of it to be drawn. The welfare food subsidy caters largely fo 
a younger age group. The nearest alternative to school meals is the famil~ 
allowance. The family allowance is a very cost-effective subsidy: and could easil~ 
be made more so. In 1966-67, expenditure on family allowances, including tht 
costs of administering the scheme, amounting to £153 million. In the same year 
the subsidy to children who paid for their school meals was probably £73 millior 
or so. Thus marginal changes brought about by varying the rate of increase o1 
the two types of expenditure could release considerable sums of money f01 
reallocation between them. Whereas the total net expenditure on school meals 
increased by 117 per cent between 1959-60 and 1966-67, total expenditure on 
family allowances increased by only 18 per cent. The latest increases in the rates 
of family allowances did not affect the figures for 1966-67. The growth of 
expenditure on family allowances has been slow relatively to other social security 
benefits also. Not surprisingly, our ratio of expenditure on family allowances to 
the gross national product is among the lowest in Europe ("Social security in 
Britain and certain other countries," National Institute Review, August 1965) 
Clearly the relative neglect of family allowances has been one of the most cruel 
and stupid aspects of our post-war social policy. It is a neglect that can be directly 
ascribed in part at least to the inefficient appraisal of the needs for and efficiency 
of, public expenditures. But it would be difficult to argue that the two services, 
one aimed at preventing child poverty in general, the other specifically at malnutrition, 
were such close substitutes that massive reductions should have been made 
in the school meals subsidy in order to finance increased family allowances. 

further and higher education 

A second field which would merit a cost-effectiveness review would be the pattern 
of expansion of further and higher education. The " objectives " of further and 
higher education are many, and a policy that neglects one of the important 
purposes cannot be called efficient. There can be no doubt that the Robbins 


Jmmittee paid insufficient attention to securing a more equal mobilisation of \ 
lent as between social classes and regions. The Robbins projections were based 
n conservative, misleadingly conservative, estimates of the number of places 
eeded to cater for suitably qualified applicants: that is, an estimate of future 
emand. Merely expanding the number of places in higher education does not 
:nd to secure greater equality in uptake as between social classes. Middle-class 
hildren take up the expansion of university places faster than working-class 
hildren do, as they did when the number of grammar school places grew between 
1e two world wars. To encourage working-class children to continue their 
::lucation would demand a different structure of the system of advanced education 
1an that suggested by the_report. The report rejected suggestions for the establish-
lent of new types of institution which would cater for new types of higher 
::lucation-vocational colleges of applied social science, junior colleges, and the 
ke-and which would attract working-class children. They recommended a slower 
1te of growth of part-time than full-time education, and failed to see the potential 
f correspondence course work which has been so successful in Russia. The 
umerical dominance of the most intellectually and socially exclusive of the sectors 
f higher education, the universities over other sectors was confirmed. That the 
niversity sector was to grow so much faster than colleges of further education 
~nored the role of the latter in mobilising working-class talent. It seems that the 
verall pattern suggested by the Robbins committee has become established. 
:etween 1960 and 1965, capital expenditure by public authorities more than 
:ebled, capital expenditure on teachers' training institutions doubled, while such 
xpenditure on further (including adult) education went up by a third. 

'his pattern probably makes little sense on other grounds also. Professor Blaug's 
10rk confirms the cornmonsense view that the rate of return on expenditure on 
ducation is very sensitive to the initial cost of the education. A reduction in the 
ost of higher education per graduate by a given proportion might well increase 
ne internal rate of return on public investment in education by the same 

•rvportion (M. Blaug, "The rate of return on investment in education in Great 
lritain," The Manchester School, September 1965) The costs of providing an 
dditional student place undoubtedly varies greatly between types of institution, 
nd between institutions of the same type. The variation in the costs of university 
aculties is fairly well documented in the UGC returns: but there has been little 
•ork done on either the short or long term marginal costs of places. Much less 
;; known about the costs per graduate in institutions from other sectors of higher 
ducation. Many of them may be able to produce graduates of roughly comparable 
tuality at much less cost than most universities. Of course, studies of costffectiveness 
in this field face enormous difficulties. But serious attempts should 
te made to study the structure of costs in relation to teaching methods, organisaion, 
location, and scale of teaching units, taking into account a broad range of 

56 
data for quantifying the relative needs of the community for people with differen 
skills. 
distribution of resources between LEAs 
One of the most quantitatively and socially important types of decision made by a 
central government department is the type of decision influencing the allocation. 
of resources between areas. Most central government departments, including the 
DES, have come to operate what to a high degree amounts to control over the area 
distribution of resources which are essential for the administration or development 
of services, which are to a considerable extent geographically mobile, and which 
are virtually fixed in total supply. One example is the power of LEAs to make 
capital expenditure. Another is their power to appoint teachers (which is limited 
by the quota system run by the DES with the agreement of the AEC). 
It is at least arguable that a distribution of resources that positively discriminates 
in favour of children who come from relatively handicapping home backgrounds 
will help to attain a higher rate of economic growth and a more open society. It is a 
condition of such a distribution that LEAs whose populations suffer these handicap-
ping factors to the greatest extent should enjoy the highest standards of provision of 
services-that there should be positive correlations between indices of standards of 
provision and resource-use and indices of the incidence of handicapping factors. 
The table opposite throws some light on this. It shows the values of correlation 
* revenue account net expenditure per thousand population. 
t number of children, per thousand population, aged two to four. 
t per thousand population. 
na Not available or not applicable. 
correlation coefficients: the values of correlation coefficients lie between -1.00 
and +1.00. A value near 0.00 signi·fies an absence of correlation. If the coefficient's 
sign is + the correlation is positive, high values of the one variable being 
associated with high values of the other. If the sign is -, the correlation is 
negative, high values of one variable being associated with low values of the other. 
The correlation coefficient squared shows the proportion of the variance of one 
of the correlated variables which can be predicted from the other variable using 
a linear least squares regression equation. 
coefficients of variation: these are computed by dividing the standard deviation 
of a variable by its arithmetic average, and form a good measure of the variation 
in the readings relative to the mean. Values can be misleading for other than 
ratio scales. 
Footnotes to table opposite. 
56 
data for quantifying the relative needs of the community for people with differen 
skills. 
distribution of resources between LEAs 
One of the most quantitatively and socially important types of decision made by a 
central government department is the type of decision influencing the allocation. 
of resources between areas. Most central government departments, including the 
DES, have come to operate what to a high degree amounts to control over the area 
distribution of resources which are essential for the administration or development 
of services, which are to a considerable extent geographically mobile, and which 
are virtually fixed in total supply. One example is the power of LEAs to make 
capital expenditure. Another is their power to appoint teachers (which is limited 
by the quota system run by the DES with the agreement of the AEC). 
It is at least arguable that a distribution of resources that positively discriminates 
in favour of children who come from relatively handicapping home backgrounds 
will help to attain a higher rate of economic growth and a more open society. It is a 
condition of such a distribution that LEAs whose populations suffer these handicap-
ping factors to the greatest extent should enjoy the highest standards of provision of 
services-that there should be positive correlations between indices of standards of 
provision and resource-use and indices of the incidence of handicapping factors. 
The table opposite throws some light on this. It shows the values of correlation 
* revenue account net expenditure per thousand population. 
t number of children, per thousand population, aged two to four. 
t per thousand population. 
na Not available or not applicable. 
correlation coefficients: the values of correlation coefficients lie between -1.00 
and +1.00. A value near 0.00 signi·fies an absence of correlation. If the coefficient's 
sign is + the correlation is positive, high values of the one variable being 
associated with high values of the other. If the sign is -, the correlation is 
negative, high values of one variable being associated with low values of the other. 
The correlation coefficient squared shows the proportion of the variance of one 
of the correlated variables which can be predicted from the other variable using 
a linear least squares regression equation. 
coefficients of variation: these are computed by dividing the standard deviation 
of a variable by its arithmetic average, and form a good measure of the variation 
in the readings relative to the mean. Values can be misleading for other than 
ratio scales. 
Footnotes to table opposite. 

JRRELATIONS BETWEEN PROVISION OF EDUCATION SERVICES 
ND MALES IN UNSKILLED JOBS IN 1966; AND INEQUALITY OF 
ROVISION IN 1961 AND 1966 

correlation with coefficients of 
low social class variation 
1966 1966 1966 1961 1966 
county administrative administrative county county 
andards indices boroughs counties counties boroughs boroughs 

-1pils per full-time teacher, 1965-66 

~imary schools + 0.06 -0.23 11.7 5.6 5.2 
:condary schools + 0.06 + 0.25 5.4 5.6 4.7 

rpenditure per pupil, 1965-66 

rimary teachers' salaries -0.05 +0.23 17.4 7.2 5.7 
:condary teachers' 
tlaries -0.34 -0.01 8.9 7.2 6.0 
on-teaching staff salaries 
>rimary) 
:econdary) 
mt and rates (primary) 
~nt and rates (secondary) 
ebt charges (primary) 
ebt charges (secondary) 
-0.00 
-0.07 
-0.22 
-0.01 
-0.31 
+ 0.02 
-0.07 
-0.47 
-0.01 
+0.05 
-0.42 
-0.30 
16.3 
9.5 
22.3 
16.4 
36.4 
20.4 
24.2 
20.2 
29.0 
22.5 
33.7 
29.7 
21.0 
16.6 
25.1 
20.6 
31.0 
26.3 
)tal expenditures 
)fimary) 
;econdary) 
+0.06 
+0.27 
+ 0.11 
-0.25 
13.4 
8.6 
8.9 
7.4 
7.0 
6.8 
ssistance to secondary 
upils, 1965-66* +0.02 -0.03 125.8 135.0 90.7 
pecial education, 
965-66* 
tilk and meals, 1965-66* 
:!creation, 1965-66* 
+0.17 
+ 0.10 
-0.01 
-0.36 
+0.39 
+0.17 
29.2 
17.2 
48.1 
31.0 
17.1 
49.3 
29.7 
15.0 
47.6 
rovision of pre-school education 
)tal, 1965t -0.14 
1aintained,1965t +0.01 
1dependent, 1965t -0.34 
-0.02 
+0.28 
-0.50 
64.1 
119.8 
82.1 
na 
na 
na 
67.6 
90.0 
112.0 
1er cent children present receiving dinners 
September 1966 + 0.40 + 0.60 
otal, September 1966 -0.28 + 0.03 
60.6 
11.8 
na 
24.7 
38.7 
18.0 
·apital expenditure at constant prices 
•rimary, 1949-64t -0.02 
econdary, 1949-64t +0.14 
na 
na 
na 
na 
na 
na 
31.4 
29.3 


coefficients between various indices of standards of provision of education service 
in 1966 and the proportion of economically active males in unskilled jobs in 
year. This is not the only, or for that matter the best index of relative deprivatio 
that could be used in this text, but if the distribution of standards with respe<; 
to such social conditions indices is similar to what it was in 1961, one's conclusion 
would be little different if one were to use other indices (Bieddyn Davies, Socic. 
needs and resources in local services, London 1968). Results are stated separatel 
for administrative counties and county boroughs since indices for the former an 
less meaningful than for the latter, individual counties being more heterogeneou 
than individual boroughs. 

The first conclusion one reaches from the table is that none of the standard! 
indices contained in it are highly positively correlated with this index of bao 
social conditions. There is a positive correlation among counties (but not amon~ 
county boroughs) between expenditure on meals and milk and low social class 
The substantial positive correlation between the proportion of pupils receiving 
free meals and the low social class index is also less satisfactory than it looks. 
since the proportion varies greatly between areas whose social conditions attribute5 
are similar, only a small proportion of the variation in the index being accounted · 
for by poverty-related variables in a multiple regression analysis (Davies and 
Williamson, op cit). Most other indices are uncorrelated with low social class. 
This is the case for pupil-teacher ratios in primary schools in county boroughs 
despite the evidence that the low social class child needs more labour-intensive 
teaching for linguistic and other reasons. There is, however, a suggestion of a 
negative correlation for this index, and hence a slight positive correlation of 
standards, among counties. This ratio for secondary schools is slightly positively 
correlated among counties, implying a slight negative correlation between standards 
and needs. There is no correlation either way among boroughs. This is in spite 
of the fact that the case for positive discrimination in favour of the poorer areas 
is strong for secondary schools, as was stressed by the Newsom report: and in 
spite of the fact that the small classes that accompany specialisation and sixth form 
study should have little effect on the ratio (see the sensitivity analysis on pages 
256--6 of Social needs and resources in local services). Teachers' salaries per 
pupil is negatively correlated with low social class among county boroughs. The 
negative correlations between debt charges per pupil and low social class illustrate 
that one of the effects of the geographical location of new school buildings has 

· 
been to provide children from unskilled workers' homes with a substantially lower 
probability of going to an attractive new school, where teachers would find it 
easier to use more stimulating and effective modern teaching techniques. The debt 
charges index is more heavily weighted with the effects of recent post-war building 
than capital expenditure on school building since 1949 at constant prices (which 
is uncorrelated with social class among county boroughs). Both the capital 


:penditure indices are very unequal. The combined effect of the differing 
tpenditures is that total expenditure per primary school pupil is uncorrelated 
ith low social class, while total expenditure per secondary school pupil is 
!gatively correlated with it. In expenditure on secondary education, at any rate, 
hat we have at the moment is negative not positive discrimination. This is not 
' be explained to any great extent in terms of the provision of selective schools. 
should be the intention of the central government to reverse this correlation, as 

for reasons of economic growth and prosperity as for social justice. 

he distribution is no more satisfactory when one examines other education 
:rvices. Astonishingly, there is a complete absence of correlation between the 
nount of money devoted to the assistance of secondary school pupils (by such 
.eans as cash grants, uniform allowances, and the like) and low social class. The 
triation in expenditure between LEA under this head is staggering. Mike Reddin's 
1portant research on income assessment scales and procedures illuminates one 
' the reasons why this is so. There is no correlation for expenditure on recreational 
tcilities. Among county boroughs, there is no correlation for expenditure on 
)ecial education for children handicapped in various ways, and there is a clear 
egative correlation among counties. The positive correlation fot the provision 
f maintained pre-school provision is quite counteracted by the negative correlation 
>r independent provision. This is so because the quantity of maintained pre:
hool provision is small. 

here is little variation between areas in most aspects of standards. At first sight, 
1is relative equality in standards may seem to be a desirable attribute. It is 
~rtainly better to have little inequality when standards are uncorrelated with LEA 
:tributes implying a high yield on expenditure than it is to have great inequality 
t these circumstances. It would, of course, be desirable to have a higher degree 
f inequality if standards were correlated with such characteristics. The table 
1ows that the degree of relative inequality of most indices fell between 1961 and 

966. The central government should be aiming both to increase the degree of 
tequality of standards and to create a positive correlation between standards and 
tdices of relative deprivation. 
:onclusion 

: is not difficult to find aspects of education policy which would benefit from 
ost-effectiveness analysis. Would the pattern of training in such professions as 
Jeial work and teaching be better organised if the initial training period was to 
e shorter and a further period of training introduced after some years' experience? 
Vould a rapid expansion of pre-school education for the relatively deprived 
ield more than some other forms of education expenditure? Is the most equitable 


and efficient way of securing positive discrimination in favour of tihe primary school 
child suffering from an educationally handicapping background to allocate 25 per 
cent more resources per ohild to rhe 10 per cent of children attending schools in 
areas judged (on vhe basi s of as yet vaguely specified criteria) to have the worst 
social conditions? Clearly, this essay has mentioned only a few of the topics needing 
discussion and research using a cost-effectiveness approach. 


abian society 


e Fabian Sodety exists to further 
ialist ·education and research. It is 
liated to the Labour Party, both nanally 
and locally, and embraces all 

! ,des of Socialist opinion within its 
1 tks-left, right and centre. 

! tee 1884 the Fabian Society has en-
i led thoughtful socia•lists who are pre' 
·ed to discuss the essential questions 

democratic socialism and relate them 
practical plans for building socialism 
a changing world. 

yond this the Society has no collective 
!icy. It puts forward no resolutions of 
1 political character. But it is not an 
~ ~anisation ·of armchair socialists. Its 
~mbers are active in their Labour 
l rties, Trade Unions and Co-operaes. 
They are representative of the lab


' r movement, practical people con·
ned to study and discuss problemsLt matter. 

e Society is organised nationaUy and 
:ally. The national Society, directed 
an elected Executive Committee, 
blishes pamphlets, and holds schools 
. d conferences of many kinds. Local 
cieties-there ar·e some 80 of them: 
self governing and are lively centres 

discussion and also undertake re-
Lrch. 

tquiries about membership should be 
1t to the General Secretary, Fabian 
ciety, 11 Dartmouth Street, London, 
v'l ; telephone 01-930 3077. 

the authors 


Ma!I"k Blaug is Professor of the Economics 
of Education at the University of 
London and head of the .research unit 
in the economics of education at the 
University of London's Institute of Education. 


H. D. Hughes is P·rincipal of Ruskin 
College, Oxf.ord and was MP for Wolverhampton 
West 1945-50. He was chairman 
of the Fabian !Society 1959-60 and 
wrote A socialist education policy (Fabian 
reseaTch series 173) and Towards a 
classless society (Fabian tract 266). 
Bleddyn Dav.ies is a lecturer at the London 
School of Economics and .PoliticaJ 
Science, and is authm of Social needs 
and resources in local services (MichaelJoseph). 

Cover design and .typography by Geoffrey 
Cannon. Printed by David Neil & 
Co. (Tu), Dorking, Surrey. 

Standard 'book no 7163 03·83 3 


recent fabian pamphlets 
research series 
233 Frederick Singleton 
Anthony Topham235 Jack Cooper 
252 Peter Mittler 
257 Ken J ones and 
John Golding261 Ken Hutchin.gs 
262 ed A. !Lester, N. Deakin 
263 Geoffrey Robinson 
264 Philip Williams 
265 Arthur Blenkinsop 
266 Richard Gott 
267 a Fabian group268 Margherita Rendel 
tracts 
321 
323 
353 
355 
361 
363 
364 
366 
373 
374 
377 
379 
380 
381 
and ot:hers 
Audrey Harvey 
Richard M. Titmuss 
Brian Abel-Smith 
a Fabian .groupL. J. SharpeK. W. Wedderburn 
David Downes 
and Fred Flower 
Norman Ross 
a Fabian group 
Brigid Brophy 
Rigas Doganis 
Rex Winsbury 
Jeremy Tunsta:ll 
John Bowers 
Harold 
Workers' control in YugoslaviaIndustrial relations: Sweden shows the way 
The mental health services 
Productivity bargaining 
Urban transport: public or private?
Policies for racial equality 
Europe: problems of negotiationAthens under the Spartans 
Enjoying the Countryside 
Mobutu's Congo 
Britain and the developing world 
Equality for women 
The two ilfelands 
Casualties of the welfare state 
The irresponsible society 
Freedom in the welfare state 
The administrators 
Why local democracy 
Company law reform 
Educating for uncertainty 
Workshop bargaining: a new approach 
The trade unions: on to 1980 
Reli.gious education in state schools 
A national airport plan 
Gcwernment and the pressFish: an antiquated industry 
young fabian pamphlets 
7 
10 
14 
16 
Howard Glennerster 
and Richard Pryke 
a study group 
a study group 
BruceLloyd 
books 
Th-e public schools 
Strangers within 
The youth employment service 
Energy policy 
3s 
3s 
3s 
~----~~------~~~----~~~~~~--------------~~ Bernard Shaw and others Fabian essays (sixth edition) cased 30s 
Margaret Cole The story of Fa,bian socialism paper 15s 
Brian A bel-Smith, Richard Socialism and Affiuence (reprint of Labour's 
M. Titmuss, Peter Townsend social plans, Ohoice and "the welfare state", 
R. H. S. Cross man Poverty, Socialism and Labour in power, 
Brian Lapping and Giles 
Radice (eds) 
Socialism and planningMore power to the people (Young 
Fabian essays on democracy in Britain) 
paper !Os 
paper 2ls 
cased 30s 
recent fabian pamphlets 
research series 
233 Frederick Singleton 
Anthony Topham235 Jack Cooper 
252 Peter Mittler 
257 Ken J ones and 
John Golding261 Ken Hutchin.gs 
262 ed A. !Lester, N. Deakin 
263 Geoffrey Robinson 
264 Philip Williams 
265 Arthur Blenkinsop 
266 Richard Gott 
267 a Fabian group268 Margherita Rendel 
tracts 
321 
323 
353 
355 
361 
363 
364 
366 
373 
374 
377 
379 
380 
381 
and ot:hers 
Audrey Harvey 
Richard M. Titmuss 
Brian Abel-Smith 
a Fabian .groupL. J. SharpeK. W. Wedderburn 
David Downes 
and Fred Flower 
Norman Ross 
a Fabian group 
Brigid Brophy 
Rigas Doganis 
Rex Winsbury 
Jeremy Tunsta:ll 
John Bowers 
Harold 
Workers' control in YugoslaviaIndustrial relations: Sweden shows the way 
The mental health services 
Productivity bargaining 
Urban transport: public or private?
Policies for racial equality 
Europe: problems of negotiationAthens under the Spartans 
Enjoying the Countryside 
Mobutu's Congo 
Britain and the developing world 
Equality for women 
The two ilfelands 
Casualties of the welfare state 
The irresponsible society 
Freedom in the welfare state 
The administrators 
Why local democracy 
Company law reform 
Educating for uncertainty 
Workshop bargaining: a new approach 
The trade unions: on to 1980 
Reli.gious education in state schools 
A national airport plan 
Gcwernment and the pressFish: an antiquated industry 
young fabian pamphlets 
7 
10 
14 
16 
Howard Glennerster 
and Richard Pryke 
a study group 
a study group 
BruceLloyd 
books 
Th-e public schools 
Strangers within 
The youth employment service 
Energy policy 
3s 
3s 
3s 
~----~~------~~~----~~~~~~--------------~~ Bernard Shaw and others Fabian essays (sixth edition) cased 30s 
Margaret Cole The story of Fa,bian socialism paper 15s 
Brian A bel-Smith, Richard Socialism and Affiuence (reprint of Labour's 
M. Titmuss, Peter Townsend social plans, Ohoice and "the welfare state", 
R. H. S. Cross man Poverty, Socialism and Labour in power, 
Brian Lapping and Giles 
Radice (eds) 
Socialism and planningMore power to the people (Young 
Fabian essays on democracy in Britain) 
paper !Os 
paper 2ls 
cased 30s