The first important point to note is that State finance is to be distinguished from State control or ownership. Questions concerning the finance of education, whatever the ownership or control of educational institutions, are amenable to economic analysis, whereas questions concerning ownership or control are largely a matter of political, social and religious values. Therefore, the former type of question will almost exclusively concern us in this chapter. The second important point is that a given financial commitment by the State may be met in various ways and will accordingly have various
of working-class children and increased equality of opportunity) are encouraged — largely in the belief that the former will
school uniforms, books and other direct outlays as well as indirect costs. There are various ways in which such grants may be made progressive (i.e. worth more to lower income groups). They can be means-tested (i.e. with lesser amounts given as parental income and wealth increases) or they can count as income for tax purposes — thus being relatively heavily taxed for high-income recipients whose marginal rate of income tax is high. On administrative grounds the latter method is desirable — but it may not be as effective if the tax system does not have the required degree of progression over the relevant income ranges. The financial burden of such a scheme — combined with subsidization of 'direct' costs — might be very high, especially if the full opportunity costs of education were to be covered. But there is no reason why full costs need be covered — partial coverage would encourage wider participation to some extent, to what extent it is difficult to say in advance, as educational participation
is conditioned by so many socio-economic factors. The economically optimum level of student support would be where the marginal social rate of return7 to secondary education would cover the marginal social cost of finance (both of consumers and producers of education). In practice, however, it is unlikely that policy decisions would be determined by such considerations.