EDITORIAL : THE GUARDIAN, UK

       

 

Greece and the eurozone: Kicking the can along

The way to sort out a country's economic problems is typically not to give it a whacking great loan at a high price and expect it to pay it back by making huge spending cuts

The clearest lesson to be drawn out of this week's back and forth in the eurozone is this: Angela Merkel, Nicolas Sarkozy and the other single-currency heads of state have no intention of changing their tactics in tackling the gigantic problems facing Greece. Operation Muddle Through will continue – despite the trouble it causes the Greeks, despite the danger it poses to the rest of the eurozone and despite logic that argues to the contrary.

About this time last year, Ms Merkel and Mr Sarkozy led the eurozone and the IMF in a bailout of Greece. Well, it was generally called a bailout – but it did nothing to sort out the country's problems. Greece, struggling to service the huge debts its public sector had built up, was effectively loaned €110bn at a fairly punishing interest rate. It was a bridging loan intended to tide Athens over until it could borrow again from financial markets. As it has become clear that investors are still unwilling to lend to Greece, at any but the most punitive rates, Germany, France and the others are having to organise another loan. The smart money is on this one being worth around €30bn. There is also some talk that the repayment terms might be relaxed on last year's credit. None of this is exceptionable. None of this is daft. Trouble is, none of this will sort out the problems facing Greece or the eurozone.

The way to sort out a country's economic problems is typically not to give it a whacking great loan at a high price and expect it to pay it back by making huge spending cuts. That does not allow for the country to make extra money (through growth that leads to higher tax revenues). Only Tony Soprano would call this an economic policy. Certainly financial markets do not rate it much – which is why they are continuing to talk about the possibility of Athens defaulting on its debt. Those infamous credit-rating agencies don't think the plan amounts to much either, which is why they keep downgrading Greece's sovereign debt. Yet this is precisely what the single-currency club is doing to Greece – and Ireland and Portugal.

The sensible policy to pursue now would be for Greece to restructure its debt: write down the value of its loans, and offer to pay back the rest over a longer timeframe. The eurozone could help with this; meanwhile, Athens could work on upgrading its (negligible) tax-collection system. The obstacle to this is an obvious one: it would mean big losses for German banks, who have lent so much to Athens. But it is bizarrely circuitous for the German taxpayer to offer a bridging loan to Greece, purely to prop up its own banking system. Then again, ever since the financial crisis broke, the European way has been to kick the can down the road.

David Willetts: The tide of history man

What was being floated might allow straight-A students who have tens of thousands of pounds to hand to buy their way into Oxbridge

Thin-end-of-the-wedge arguments are often lazy arguments, but glance back at the last quarter century in higher education you can see they have a place. When the very first loans began eating up maintenance grants, the spin was that whereas students could reasonably foot living costs, education itself would of course remain free. The line held for somewhat less than a decade, before the Dearing review proposed the first fees. New Labour implemented them, this time with the reassurance – repeated in its 2001 manifesto – that the sector was being put on a sustainable footing, so as to forever preclude university-specific charges, which would deter the poor from elite courses. By 2004, though, the argument had shifted on to the form that such top-up fees should take. Although backbenchers fitted a tight cap, Tony Blair forced the principle through. By now he regarded it as commonsensical for graduates of top courses to pay more, and he insisted top-ups were the inescapable corollary of the state investing in university for the half of the population who he hoped would attend.

Last year the coalition tripled the fees cap and snatched all subsidy from humanities teaching after the aim of getting half of all youngsters to university was quietly dropped. These fresh moves towards pay as you learn stirred anger on campuses and splitting headaches for the Lib Dems. But it closely followed a Browne report built on the firm logical footings of the now ubiquitous view of education as a financial investment. And the universities minister, David Willetts, a thoughtful and decent man, was proposing no more than another brick in the wall of the educational market when he told Monday's Guardian that he was looking at expanding "off-quota" places, which in plain English means places which could be auctioned off to the highest qualified bidder. As with private patients in NHS hospitals, the pragmatic case is easy enough to make – a public institution can cream in resources from the monied, and use them to service the broader community. But if Mr Willetts had cast his eyes up from the economics textbook, he would have spotted the obvious flaw. As educationalist Sir Peter Lampl, ordinarily no friend of the left, put it: "Students from privileged backgrounds are already way over-represented at our top universities and this will make matters worse."

A body swerve followed during the day. Having been on the BBC in the morning discussing how candidates who had made their grades but not been chosen for their course might harness private means, in the afternoon Mr Willetts headed for an emergency debate in the Commons, where he protested that his only aim was enabling charities to bypass the regular rationing of places by sponsoring students, as businesses already can. Between the two Willetts engagements, people clocked that what was being floated might allow those among the growing band of straight-A students who happened to have tens of thousands of pounds to hand to buy their way into Oxbridge. No matter whether this is efficient or might free up resources for the poorer, it is flatly unfair.

The business secretary, Vince Cable, had a hand in choreographing Mr Willetts's boomerang dance. The Lib Dems certainly cannot afford to slip further down the market road just now. But it was Dr Cable who sold the pass on the graduate tax he once wanted, and supported higher fees in return for important but obscure tweaks to loans and fees. There is no longer a line in the sand against colleges viewing themselves as commercial suppliers in a global market. Until that basic framework is challenged, the idea of places for sale will not be banished. Indeed, rich home students might start lobbying for the right to be treated like wealthy foreigners, who already buy their way in. Mr Willets was humiliated yesterday, but unless the drift of events is challenged, history will judge he was merely ahead of his time.

In praise of... Jenni Murray

Anyone who dismisses Jenni Murray as the voice of Middle England is in for a rude awakening

All was set for it to be Year of the Lad at the Sony Radio Academy Awards on Monday night, with wins for Frank Skinner, Robbie Savage and (ahem) Ronnie Wood. Until, that is, Jenni Murray was summoned onstage. The Woman's Hour presenter who received the gold award for a career of exemplary broadcasting is everything that the Stones guitarist is not. She has many qualities, but blokeish is not one of them. Yet anyone who heard her interview a survivor of the 7/7 bombings last week could hear her qualities in surround-sound detail. For someone who recognises the balance between asking the questions everyone wants to hear and protecting their interviewee from descending into their own grief, Murray twice brought her eloquent witness to tears by drawing her back to the point in her narrative where she acknowledged the guilt she felt at having survived the blast. Forthright, maybe; direct, certainly. This was radio at its rawest – and yet everyone kept their dignity. Anyone who dismisses Murray as the voice of Middle England is in for a rude awakening. She has a deceptively warm radio voice which she uses both to entice the likes of Caroline Flint into the studio for the first time since she resigned from Gordon Brown's cabinet, and to cut through the flannel when her quarry is in the seat. Her achievement has been to make the programme she presented for more than two decades one of the flagship brands of Radio Four. She leaves the blokes of radio far behind.