How government is in a bind over university fees

10 Feb 2011

The government has got itself into a very difficult place over university tuition fees. The problem goes back to the decision to cut teaching grant so drastically in the Comprehensive Spending Review. 

That decision means universities have calculated they must charge, on average, fees of around £7,500 just to make up for their lost teaching grant. If they want to make up for the lost funding for research and capital, they estimate they will need to charge even more.

So, with the top universities heading towards fees of £9,000 (in order to keep pace with other global leaders), and others needing to charge at least £7,500, it is clear the average fee will be in the region of £8,000+. 

Moreover, the gap between £7.5k and £9k does not leave much room for a market and so many universities will feel they may as well go for the upper level rather than risk being seen as second class (the precedent of the earlier £3k cap shows that the few universities that went below that level regretted it later on). 

At a meeting between the Deputy Prime Minister, Nick Clegg, and university leaders this week, it emerged that the Treasury has been working on the basis of average fees of £7,500. This would cost them £3.6 billion for the support package for student loans.

If the final average figure is more like £8.5k rather than £7.5k then the Treasury's calculations will be seriously out. But vice-chancellors were told that the government cannot allow the total spend to rise above the £3.6 billion. So either the government would have to reduce student numbers or they would have to claw-back cash from the universities. 

At the meeting this week, it was even suggested that the government might consider clawing-back money from universities’ research grants (after all, there may not be enough teaching grant left to claw-back). I’m told that suggestion brought laughter of disbelief from vice-chancellors. 

Meanwhile Nick Clegg told students in a BBC news debate that universities would simply not be allowed to charge more than £6k unless they can prove they will take more poorer students. 

Many will try to broaden their intake but the vice-chancellor of a university with one of the best records on access told me that could prove impossible to achieve.  The fact that a very high proportion of students apply only to local universities shows hard it may be for some institutions to broaden their intake. 

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