Leader: Testing times for low-fee strategy

December 3, 2004

By this time next week, the comfortable assumption that any competition in the fast-approaching higher education market would be confined to bursaries and scholarships may have been shattered. Leeds Metropolitan, Bradford and possibly other universities are set to challenge the accepted wisdom that it will be impossible to charge undergraduates less than £3,000 for courses from 2006-07. It would be a brave step to take, and one that would have much wider implications.

For the universities themselves, the risk is that a low-fee strategy will be seen as an admission of low quality and an inability to compete with those charging the full amount. Market research at the University of Central Lancashire would seem to bear this out. But there are numerous examples in other markets of successful price-cutting in the face of overwhelming scepticism - newspapers spring to mind. And once even a small number take the plunge, others will be forced to consider following suit.

Ministers have always rejected the argument that a £3,000 cap was too low to enable universities and colleges to set a range of different fees, while giving the impression that they did not believe their own rhetoric.

Now they may have to live with the consequences of fee levels that will leave little or no scope for awarding the bursaries that the Office for Fair Access will demand. It is hard to imagine discounts of less than £1,000 having sufficient impact to lure prospective students away from full-price alternatives, and that would swell an institution's coffers by little more than £800 per student. The irony of a university being taken to task by Offa for charging too little will not be lost on the opponents of the new system, but it would amount to no more than a re-run of the original debate over top-up fees. Would students prefer to amass lower debts, or have more money to live on while in higher education? At least they would have the choice if some universities go for the low-fee option.

In practice, both Leeds Met and Bradford (as well as London Metropolitan University, should it make the same choice) have records for widening participation that ought to deter those who might make an issue of bursaries. Simon Lee, Leeds Met's vice-chancellor, admits that some colleagues think he is crazy to consider breaking ranks on fees. But if variable fees are to mean what they say, someone has to test out the market.

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