John Denham: £9K fee system ‘wastes money’

The £9,000 fee system “wastes money hand over fist” and vice-chancellors are engaged in a culture of “fee envy”, according to a senior Labour figure.

September 24, 2014

John Denham, former secretary of state in the Department for Innovation, Universities and Skills, made the comments at a fringe meeting at the Labour Party Conference in Manchester last night.

Carl Lygo, vice-chancellor of for-profit-owned BPP University, also told the meeting: “It does not cost £9,000 a year to teach a degree. Something else is going on with that money.”

Mr Denham told the event, hosted by the right-of-centre thinktank Policy Exchange: “We run a system that wastes money hand over fist. And it is poorly designed to get value for money and deliver what the country needs.”

He said such waste was “intrinsic in a high-fee, high-loan system”, and discussed plans he has previously set out to lower the cost of university to students and taxpayers.

Mr Denham criticised the current level of spending by the government on loan write-offs. This money should be “put into tuition fees and teaching”, he told the event, titled “Why on earth does going to university cost so much money? Achieving financial sustainability in the English HE system”.

There was also “political inefficiency” in spending on maintenance grants and access that he put at £600 million. Such access spending was needed because the government is “so worried [it] screwed up access by putting the high fees up”.

Mr Denham argued that costs were also high because the higher education system is “more and more a three-year residential system”, which “assumes that it’s not a proper university education unless you live away from home, which is extraordinarily expensive”.

The former minister also said that a culture of “fee envy” among vice-chancellors, where higher fees were seen to equate to institutional prestige, had helped to push up prices. “We need to break that culture,” he added.

Mr Lygo said he “couldn’t agree more” with Mr Denham’s comments on costs in the £9,000 system. BPP had introduced a two-year law degree in 2009 which he said produced graduates “going into magic circle law firms”. The total course fee was £12,000 (now £14,000) “for a private, profit-making provider to be able to provide a higher education that’s accepted by the best employers in the field in the country”.

He criticised the notion that students must leave home, live in expensive halls of residence and take courses with “long summer holidays”.

Mr Lygo continued: “We’re from the private sector. It’s taken somebody who’s not in ‘the club’ to come along and say: ‘You’re absolutely right, there is a different model that lower cost that can be respectable for employers and delivers high quality.’”

Jonathan Simons, head of education at Policy Exchange, told the meeting: “I do like the students-as-consumers movement that is beginning to emerge. It is wildly unpopular…in most universities. There is definitely a sense of, let’s face it, sniffiness that students should start to be coming to people and saying: ‘Hold on a minute, what am I getting for my £9,000 a year?’”

But Mr Simons said that culture was “a fantastic development”, adding: “That’s the way you continue to drive quality.”

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