Free market on fees threatens rough ride in 'perfect storm'

Many universities set to lose income overall if cap is lifted, researcher warns. Simon Baker reports

September 2, 2010

The English universities seeking to have the cap on tuition fees removed may be "turkeys voting for Christmas", as such a move could actually reduce their income, an academic has cautioned.

Paul Benneworth, of the University of Twente in the Netherlands, said a free market in fees could have this adverse effect due to a "perfect storm" of factors, including the end of widening participation in higher education and the growth of private universities.

Although elite institutions at the very top of the league tables would not be affected, others would be forced to undercut each other on price to attract dwindling numbers of students, Dr Benneworth argues in this week's Times Higher Education.

The senior researcher in higher education policy says that the result would be a loss of income overall.

"In all likelihood, a number of universities currently arguing for higher fees will lose out in a big way under the new arrangements," he adds.

An eventual removal of the fee cap has been advocated by the Russell Group of large, research-intensive universities in its submission to the independent review of funding and student finance, led by Lord Browne of Madingley, which is likely to report next month.

However, Dr Benneworth says: "Unless universities band together to agree a fair, stable way to fund future higher education, then 2010 will be remembered as the year the Russell Group turkeys voted for Christmas."

His warning comes as the sector prepares for two months of intense political activity, beginning with the Liberal Democrats party conference in just over two weeks and culminating in the government's Comprehensive Spending Review, due on 20 October, and Lord Browne's findings.

The aftermath of this frantic period could represent the sternest test to date for the Conservative-Lib Dem coalition as it decides how to adapt Lord Browne's suggestions into a policy that Lib Dem MPs - who before the general election pledged not to increase tuition fees - can accept.

However, the signs are that the war may not be about the system of student finance the coalition chooses to endorse so much as about language.

The past two months have been dominated by a debate on whether the coalition is considering replacing fees and loans with a graduate tax after Vince Cable, the Lib Dem business secretary, proposed a greater link between "graduate contributions" and earnings.

Critics have been quick to discredit the idea of a pure graduate tax, but government ministers themselves have not used the term and senior Conservative sources also moved quickly to dismiss suggestions that it was being considered.

Senior sources in the sector believe that the government's use of the phrase "graduate contribution" is not masking an idea for a new tax, but is instead deliberately ushering in a change of language - whatever the system - so that higher payments to universities are palatable to Lib Dem MPs.

For many in higher education, this move aims to correct Labour's "mistake" of sticking with terms such as tuition fees, loans and, as a consequence, debt, when the system was last overhauled in 2004.

Janet Beer, vice-chancellor of Oxford Brookes University and chair of the University Alliance group, said language was a problem, but it should not prevent reform of the system.

The University Alliance has proposed a graduate contribution scheme linked to earnings, but crucially wants to keep the link between individual universities and what their graduates pay.

"This is not just a rebranding exercise. The current system needs reform, but certainly the emotive nature of the word 'debt' is clouding the issue," she said.

"We need to draw a line under the current system, even while carrying forward some of its best features, so that understanding of higher education finance can be improved. One of these positive features is that the student does not pay, the graduate pays, and they pay according to their capacity to do so."

Jonathan Tonge, professor of politics at the University of Liverpool, said if Mr Cable's intention was to muddy the waters with a change of language it would be a difficult task.

"It is difficult to rebrand something that is already in the public's mind as a tuition fee unless you overtly change the system," he said.

The real test for the coalition will come when the proposed reforms are finally laid before a House of Commons vote.

Under the coalition's agreement, the Lib Dem MPs can abstain. But if enough of them rebel and oppose the legislation, the whole pact could come under threat.

Professor Tonge, a former chair of the Political Studies Association, said that in reality abstaining will not be enough for many Lib Dems to retain credibility, especially in constituencies with large student populations, and so a potential coalition-wrecking vote could be possible.

"Abstention is not a credible position for a major political party like the Liberal Democrats," he said.

"This may not be a Cameron versus Clegg deal-breaker - Nick Clegg probably agrees that universities should charge more - but for some Lib Dems this is a serious matter and the (Commons voting) arithmetic could be tight."

The voting intentions, strategies and politicking of the Lib Dems will become clearer later this month when the party holds its annual conference in Liverpool.

Consensus reached: 'Customers' deserve greater information

For all the disagreements around the higher education review led by Lord Browne, there are a variety of issues where a consensus has emerged.

One is the need to increase the information on universities for prospective students. Another is the problem of restrictions on financial aid for those studying part time.

Lord Browne's final report seems bound to address these two problems - especially as the government has indicated its willingness to tackle them.

The coalition's original agreement stated it would "review support for part-time students in terms of loans and fees", and Lord Browne is expected to recommend ending the current disparity.

However, whether financial constraints allow the government to adopt a system that satisfies critics of the present arrangement is less certain.

The cost to the taxpayer of any new system of student support will be crucial - if government subsidies for loans are eliminated, then it seems likely that aid will be provided.

Martin Bean, vice-chancellor of The Open University, and David Latchman, master of Birkbeck, University of London, have been among those leading the campaign to extend aid to part-timers, which has widespread support across the sector.

Mr Bean told Times Higher Education that the idea of linking graduate contributions to a whole degree had to be replaced by a credit-based system to be entirely fair.

"We should celebrate anyone that goes to university regardless of whether they have a degree or not," he said.

While the government has indicated it will look at the part-time problem, it has been much more vocal about the amount of student information available.

David Willetts, the universities minister, has already set about changing the rules governing the information universities must provide, including contact hours, class sizes and data on graduate employment.

Lord Browne is also certain to make recommendations on the issue, as any proposal for universities to charge more will have to be accompanied by allowing greater scrutiny from their ever more demanding "customers".

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