Three out of four universities look set to charge the full £3,000 a year top-up fee from 2006, scuppering the government's plans to create a market in higher education, says Sir Howard Newby, chief executive of the Higher Education Funding Council for England said this week.
Sir Howard gave MPs the first official estimate of the likely outcome of top-up fees announced in January's higher education white paper.
Appearing before the Commons' education and skills select committee, Sir Howard said that if the government had wanted to create a market in higher education, where universities pitched course prices according to student demand, then they should have raised the maximum fee to £5,000 a year.
Sir Howard asked: "Is the £3,000 fee enough to create a differential market in higher education? I think not."
Sir Howard said that fees of up to £5,000 would have to be supported with far more generous maintenance allowances. A £1,000 a year grant is to be introduced from 2004 for poor students.
MPs asked Sir Howard if he thought income from increased fees would provide enough money to allow the sector to expand and hit the government's 50 per cent participation target by 2010.
Sir Howard said that higher education would need an extra £1.8 billion a year in recurrent funding by 2010 and £2.8 billion as a one-off capital injection.
The current spending settlement covering 2003-06 provided for 19,000 extra higher education places over the three years, which Sir Howard described as tiny.
He said that the government would not hit its 50 per cent target unless there was significant investment in the next spending review period, 2006-09, for student number growth.
Sir Howard had little to cheer university staff. He said that while there was money in the current spending settlement to provide for an across-the-board increase in pay it would amount to little, if anything, above inflation. He said that higher pay rises would be awarded through mechanisms for rewarding teaching excellence.
Responding to Sir Howard's estimate on the proportion of universities charging full fees, a spokeswoman for the Department for Education and Skills said: "We will be very interested to see how universities respond to this opportunity. It is too early to predict exactly how they will do so."