David Willetts states that the modelling undertaken by London Economics in relation to the assessment of the resource accounting and budgeting (RAB) charge for higher tuition fees in England is "relatively basic". We would like to point out that it is anything but basic and relies on sophisticated statistical modelling using information from the Labour Force Survey.
When addressing the current system of student fees and funding, and the resource flows between students/graduates, higher education institutions and the Treasury, the modelling estimated the current RAB charge to be around per cent - in line with government estimates. Once the coalition's proposed changes to fees and funding are considered and the model updated, we estimate the RAB charge to be approximately 37-38 per cent (using best estimates of fees in the sector).
Significant thought and effort has been undertaken to understand the complexities of the government's proposed system of fees and funding, and equal care has been taken to understand the financial implications of the changes. It is incorrect to characterise the approach as "basic".
Gavan Conlon, Partner, London Economics