By proposing a reintroduction of greater direct public funding and an increase in student maintenance grants, Labour has prompted questions from several senior sector figures on whether it could afford to continue with the coalition government’s decision to uncap student numbers.
Meanwhile, Universities UK was more conciliatory in response to Labour’s announcement than in its previous public comment on the policy.
Earlier this month, vice-chancellors on its board published a letter in The Times, which said it was “implausible” that a new government would be able to make up a £10 billion funding gap over the next Parliament between the current £9,000 system and a £6,000 system.
But Sir Christopher Snowden, UUK president and vice-chancellor of the University of Surrey, said today: “Universities will welcome the assurance that the balance in funding will be made up in full and will welcome the increased support for student living costs. It will go some way to help reassure universities that a future Labour government would continue to provide a stable funding environment in the next parliament.”
However, he added: “Concerns will remain that, given the many other pressing demands on public funding, the long-term feasibility of such a promise may be difficult. The policy will make it more challenging to secure the increased public investment in other priorities, such as research, innovation, and social mobility.”
Wendy Piatt, director general and chief executive of the Russell Group, said: “We welcome the Labour Party’s stated recognition of the importance of higher education and the promise that government funding will replace fully income lost from a cut in fees. We also welcome the increase in maintenance support for needier students.
“However, we would be placed into a position of having to trust that any future government will provide sustainable funding for our universities and not divert resources to other priorities. We therefore remain cautious because the proposed system makes us more dependent on direct government funding which might be vulnerable to future cuts – even if hypothecated.”
She added: “It is also important to recognise that the fundamentals of the current student finance system – which is progressive, efficient and potentially sustainable – in England are working.”
Nick Hillman, director of the Higher Education Policy Institute, said: “Our polling shows students, unsurprisingly, like lower fees. We also know students want more maintenance support because the British model of moving away from home for three years to attend university is an expensive one. Many students will welcome the proposals.
“Universities will continue to worry whether they will be as well funded in the future as in the recent past, although Labour say they will fully fund the change.”
Mr Hillman added: “One big outstanding question is how many university places will be available once the new rules come in.
“The coalition are letting universities recruit as many students as they want…Labour have, to date, refused to match the commitment to let universities recruit everyone they want to – and that may have just become a little harder for them to do.”
Alistair Jarvis, UUK director of communications and external relations, tweeted: “Welcome increase in support for student living costs & commitment to maintain university funding. Hope for commitment to no return of SNCs [student number controls].”
Alex Bols, acting chief executive of GuildHE, tweeted that Labour’s policy “must ensure higher education remains available to all and [does not] return to system of controlling student numbers”.
John Cridland, CBI director-general, said: “Changes to the structure of fees are a political decision, but the key thing is that funding to higher education itself is maintained.”
But he added that changes to pensions tax relief, through which Labour proposes to fund the fee cut, “make it very difficult for people who are trying to save for the long-term”.
Michael Gunn, chair of Million+ and vice-chancellor of Staffordshire University, previously a signatory to the UUK letter criticising Labour over £6,000 fees, said: “This is a very welcome clarification from Labour. The commitment to fully fund universities for the lifetime of the next Parliament will provide an assurance to universities that they will not be short-changed if fees are reduced.”
Pam Tatlow, chief executive of Million+ said: “A reduction in fees has the potential to save the Treasury and taxpayers’ money because it will reduce student debt and more graduates are likely to repay their loans. There is a strong case for all parties to be more transparent about the real long-term economic costs and benefits of their higher education policies before the election.”
Maddalaine Ansell, University Alliance chief executive, said: “We are reassured that what Labour have announced today demonstrates a strong commitment to maintaining investment in higher education and in making sure students are able to access financial support through increased maintenance loans. This is critical to securing the future of higher education in the UK at a time when it is most needed to deliver UK growth.”
Sally Hunt, University and College Union general secretary, said: “Any proposal to reduce the debts faced by students entering higher education is a step in the right direction. However, we are disappointed that Labour did not go further and opt for a business education tax.
“By modestly increasing corporation tax, tuition fees could be abolished altogether with the most profitable businesses paying their fair share towards the higher education bill.”
David Phoenix, London South Bank University vice-chancellor, welcomed Labour’s plans, saying the proposal “would reduce the level of loan write-off to be dealt with by future taxpayers, and should therefore ensure the sustainability of the higher education sector”.
However, the Institute for Fiscal Studies says in its briefing note on the policy that mid-to-high-income graduates “are the primary beneficiaries of this reform, with the very highest earners benefiting the most, despite the rise in interest rates that they would face. This is because high-earning graduates are the most likely to repay their loan in full under the current system…Most lower earning graduates will be unaffected.”
But the IFS says that the pension changes proposed by Labour would “more than offset the long term increase in government debt created” by the £6,000 policy.
It is “possible” that cutting fees could help part-time student numbers recover, the IFS also says.
And it adds: “The fact that the policy has been pre-announced means that those applying to enter university this year may respond to the change in regime, for example by deferring their secured place at university or not applying through clearing if they fail to meet their existing offer. If such behavioural change were significant enough, then it might have implications for the overall numbers of students entering university in September 2015.”