Leader: Confusion reigns as fees bring new pressures

October 17, 2003

Today's top-up fees survey is far from complete, but it gives a much fuller picture than might have been expected of institutions'

opening positions in the coming higher education market.

It is remarkable that so many have already determined their strategies and are prepared to declare their intentions. There is, of course, plenty of time for them to change their minds before fee levels have to be published (let alone students admitted) but it is clear from the survey that the market is not going to operate as ministers intended. Not only are many more institutions than the government hoped - colleges as well as universities - thinking of charging the full £3,000, but the variations between subjects could have damaging consequences for some disciplines.

Universities will have to satisfy the access regulator on their social mix, but there will be no obligation to offer particular courses. If they try to charge the maximum for expensive subjects, such as some branches of engineering, they may not be able to fill enough places to run the course.

If they opt for minimal fees, sooner or later there will be pressure to give the places to a course that commands a higher price. What will the funding council do then if whole regions are left without courses in a subject judged important to the economy? Can it intervene if a subsidy at one university might affect the viability of a competitor? This is just one example of the patchwork of decisions facing universities, assuming the top-up fees legislation gets through Parliament.

Some potential pitfalls apparently have not been considered in the modelling of different fee levels by civil servants. Might a university be challenged, for example, if the pattern of fees for overseas students is at variance with those for the home market? Most universities charge non-Europeans more for science than arts courses, but burgeoning demand from British students for the arts and social sciences (and especially for law and business studies) would suggest a totally different pricing strategy.

As in a number of other areas, those setting the fees will be taking a leap in the dark. The controversy surrounding independent school fees, which have attracted allegations of illegal price-fixing, is a timely reminder that universities cannot seek safety through collusion. And they cannot even be certain that the Treasury will not claw back at least part of their gains by reducing state support for higher education. There have been assurances that fee income will be additional to current levels of public funding, but no one is pretending that this guarantee will hold for long.

Another chancellor, let alone another government, would hardly feel bound by it.

The THES survey confirms that the most common response to such uncertainty will be to charge maximum fees wherever possible. There may be discounts for local students and special offers in clearing where courses are struggling to recruit, but for the moment most universities are more afraid of looking second-rate than of pricing themselves out of the market. The question is what will happen if they get it wrong, as some surely will. Few in higher education have the expertise in marketing needed to confront such a novel and complex situation with real confidence.

The political rhetoric will be about institutions living with the consequences of their decisions, but universities have become essential elements of their local economies and all have their quota of potentially vulnerable MPs. Whenever a university has been in serious financial trouble in the past, a rescue package has been arranged. Top-up fees will make that a much more delicate operation, but it is hard to imagine the politicians living with the ultimate manifestation of the market: the closure of a university.

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