Funding gap may see fees treble

December 1, 2000

Universities may be forced to double or treble tuition fees to help plug a £7 billion hole in higher education funding, according to a new report.

Annual fees of more than £3,000 on some courses is one of the options modelled by consultants London Economics (LE) in a report commissioned by the Committee of Vice-Chancellors and Principals.

All of the six main options modelled involve some increase in up-front undergraduate tuition fees or graduate contributions.

The CVCP published the report this week to mark its relaunch as Universities UK. The report will inform Universities UK's ongoing review of funding options. Vice-chancellors aim to decide on a preferred option by spring.

Tony Bruce, director of policy at Universities UK, said: "It is very unlikely that all of the unmet investment could be provided by public sources. There will have to be some kind of split of that funding gap between the main beneficiaries, public and private.

"What I hope will also come out of this report is a new statement of Universities UK's funding principles, which, first and foremost, should refer to additionality. We are raising this money from students and graduates to invest in higher education not as a subsidy for other public funding."

London Economics calculates that higher education needs an extra £1.4 billion a year from 2004, rising to £1.6 billion extra in 2009. The increases amount to 25 per cent on top of current annual funding levels, according to LE.

The £1.4 billion is broken down as follows: £260 million for extra student numbers; £50 million for widening participation; £470 million for teaching and research infrastructure; £700 million for improved staff pay and conditions. In 2009, the figures are, respectively: £700 million, £50 million, £470 million and £700 million. In both cases there are possible offsets, including efficiency savings, which reduce spending to the totals indicated.

The LE report points out that the cost of widening participation, including the costs of the new two-year foundation degrees and improvements to the research infrastructure, would have legitimate calls on public funding.

It argues that widening participation and foundation degrees are government policies, the cost of which government should pay.

Critical to the LE assessment is "additionality". In other words, to what extent is an option likely to substitute private funding for public funding without bringing about an increase in overall funding.

The Dearing report raised hopes that the recommended flat-rate tuition fee of £1,000 would be additional to a sustained annual level of core public funding for teaching. In fact, the government reduced the public funding component pro-rata with the increase in means-tested fee income.

So, despite tuition fees, higher education has had to cope with an annual 1 per cent cut in funding per student between 1998 and this year. Only next year does funding per student look likely to rise by an estimated 0.5 per cent. Thereafter it may level off.

The report says: "The central issue is whether the performance of the UK higher education system is sustainable at current levels of expenditure per student."

The report shows that, at 1999 prices, funding per student, including private tuition contributions, would fall from £4,722 in 1998-99 to £4,682 in 1999-00, £4,628 in 2000-01 and £4,587 in 2001-02. Strip out private fee contributions and the cash per student drops to £4,593, £4,465, £4,332 and £4,240 respectively. Total funding per student has been revised upwards for 2001-02 since the summer spending review.

Comparisons with other Organisation for Economic Cooperation and Development countries, reproduced in the LE report, show that the UK has low tertiary education spending relative to gross domestic product. The LE report says that, in 1997, the UK would have had to spend £1,000 more per student to reach the OECD average.

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