Budget gloom raises spectre of study levy

May 31, 1996

The threat of a levy on new home students is moving steadily back into sight as hopeful bids are submitted for the next public spending round and an increasing number of universities, often prestigious ones, announce deficits.

Earlier this year the threat of such a levy produced the Dearing inquiry. It also led to a hope that the 1996 budget will deliver some of the concessions that the Committee of Vice Chancellors and Principals demanded of the Government.

But last week's economic forecast from the Confederation of British Industry cutting its growth prediction, reinforced the belief that this year's Budget will be little more generous than 1995's - whichever party is in power.

Labour's student contribution plans, also announced last week, address long-term funding worries but offer nothing to the universities - rumoured to number up to 30 - under severe short-term financial pressure.

So what then? "It depends on whether we maintain our anger," said one vice chancellor. The CVCP only has power to recommend action and final decisions are in the hands of individual institutions. Will universities really be willing to turn away first-year students who fail to put cash upfront? And would a levy bring in enough money to be worthwhile anyway?

The Pounds 300 figure now fixed so firmly in the public psyche had its earliest origins in calculations by Leslie Wagner, vice chancellor of Leeds Metropolitan University and first proponent of the levy - although he, rather pointedly, wanted to call it the "Government funding deficit".

It arose from a rough calculation of how much extra income would be needed per first-year student to compensate for the 1995 Budget's cut in the unit of resource and was picked up by the CVCP.

But even then it was not hard to find vice chancellors willing to argue that Pounds 300 was too little. If the next spending round does not reverse cuts foreshadowed in the 1995 Budget, the funding gap will widen. So will the amount per student needed to balance the books.

There will undoubtedly be administration costs, although Professor Wagner argued that these need not be too high if universities link the levy, and exemptions, to the student grants system.

Institutions worried about students from low-income homes will try to safeguard them through exemptions and scholarships.

Professor Wagner has suggested that all levy income be paid into a national pool to be divided between institutions - rather like the equalisation payments that once shifted money from richer to poorer London boroughs.

What figure the CVCP would fix on is, as one vice chancellor says, a decision on quality rather than balancing the books: "You can always do things more cheaply if that is the sole objective. The real question is what level of quality you are aiming to deliver - and that determines how much you need."

It is a question that most vice chancellors are predictably wary of discussing. But one possible starting point for discussion comes from Derek Roberts, provost of University College London. Dr Roberts emphasises that he is not advocating a levy, but in line with CVCP policy wants to see students make a contribution via income-contingent payments after they have graduated. On that basis he has suggested that a contribution of around Pounds 1,000 per student would be sufficient to maintain quality.

Contemplating that calculation vice chancellors, staff and students alike will be hoping that the levy is higher education's equivalent of nuclear weaponry - intended for deterrence rather than use.

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