A major new review of university funding could potentially bring the return of the student numbers cap and a cut in funding per student, according to policy analysts.
Although the terms of the review, announced by the prime minister during her speech at the Tory party conference last week, have yet to be announced, some sector observers believe it could put all options back on the table in terms of how universities are funded. But others suggest that the exercise could have specific objectives, such as "price differentiation", in mind.
The impetus behind the review appears to be primarily political, with the Conservative leadership rattled by the electoral impact Jeremy Corbyn scored with his pledge to scrap tuition fees and reintroduce maintenance grants.
Nick Hillman, director of the Higher Education Policy Institute, said that if it was a “genuine review” then there would be opportunities and risks for universities. “The point about a review is that absolutely everything gets thrown up in the air again,” he added.
“This could lead to some improvements for part-time students, [whose numbers] have had a massive decline, or there could be some extra focus on the quality of the student experience, or it could lead to the reimposition of student number controls and less money for funding each student,” he continued.
Mr Hillman, a former adviser to Lord Willetts in his time as universities minister, added that he has yet to meet any senior politicians who say they want to see the numbers cap return.
Given some of the media coverage of universities in recent months, Mr Hillman said there was a risk that institutions could end up with less funding per student.
He added that those who have been “mouthing off over the summer…have forgotten about what the £9,000 [fee] is. It is a good sum of money to educate students to a world-class standard. You can’t reduce it and think there will be no impact at all on the quality of education."
Mr Hillman said any cut in the headline student fee would leave a funding shortfall that he was “sceptical” the government would cover beyond the short term.
Andy Westwood, professor of government practice at the University of Manchester, said the politics of student finance had made a review “inevitable”. But it seemed No 10 had “some very clear objectives” from it, which included “price differentiation, price objective, price competition and a big theme on value for money and cross subsidy”.
There was also a risk that Theresa May’s waning popularity could render it subject to “political forces”, he added. “That could mean that the policy asks of the review change as its task masters change,” he said.
Following reports that universities' fee caps could be linked to their graduate earnings, Professor Westwood said this was a “utilitarian” approach to funding that was at odds with the priorities of the industrial strategy, which ministers hope can address regional differences in productivity and growth.
Gavan Conlon, a partner at London Economics, who has worked on several sector finance reports, said that it was important the review had the correct remit. “If they get the criteria wrong then we will just end up being in the same situation in five to 10 years' time,” he said.
“It has to be far-reaching and looking at all aspects of higher education fees and numbers…There has to be a consideration on who pays, whether it is the students or the Exchequer but also whether it should be employers,” he added.