No extra cash as Treasury grabs fees

August 22, 1997

UNIVERSITIES will not see a penny of student tuition fees over the next few years because the Government intends to siphon off the cash to cover central administration costs.

The Department for Education and Employment confirmed this week that it plans to stop paying the whole cost of undergraduate tuition. It will reduce its contribution in direct proportion to the new fees to be paid by students from next year. The more students or their parents pay towards tuition the more the state can cut from its contribution.

The resulting saving to the state will help cover the start-up costs of the new student loans system.

It means that, against university expectations, total tuition income will stay the same. The sector already faces a Pounds 900 million funding shortfall for 1998-2000, as identified by Sir Ron Dearing. In the face of such financial pressure and uncertainty, institutions may consider levying top-up fees.

Martin Harris, chairman of the Committee of Vice Chancellors and Principals, said: "It would be indefensible to require present and future generations of students to contribute if there was no direct improvement in the funding position of higher education."

Many on the Dearing committee had expected that the Government would continue to pay the same towards tuition costs and that a student or parental fee, of up to Pounds 1,000 a year, would be extra.

David Watson, a member of the main Dearing committee and vice chancellor of Brighton University, said: "There was a clear implication that this should be a new stream of money and that other things should not be adjusted around it to make it less effective."

Douglas Trainer, president of the National Union of Students, said: "It confirms what we have said all along - there is no logic in levying fees in higher education. One of our greatest fears is that top-up fees are now firmly back on the agenda."

DFEE spokesmen insist that money will be available from tuition fees in the medium and long term. What the DFEE saves on tuition contributions will be invested in further and higher education. However, the department admits that in the short term any tuition savings are likely to be diverted to setting up the student loans system.

A spokesman said that it was impossible, at this stage, to be more specific than a "few" years. A departmental colleague said that more money could be secured in the short term if the DFEE secures a bigger share of public spending. The Government is reviewing departmental spending and higher education is fighting its corner against powerful claims on resources from schools and the health service.

Higher education minister Kim Howells said: "The funds to be made available for universities in the next few years will be considered as part of the Government's comprehensive spending review."

The Government is sticking by its target of raising Pounds 1.7 billion for further and higher education by 2015, although it admits that the bulk of this will come through the new student loans system not through tuition fees. Loan repayments could start to come on stream by 2001-2002, when the first students to study under the new system graduate.

It is possible that the sale of the existing student loan debt, expected in the current financial year, could raise Pounds 1.6 billion. But financial advisers to the Dearing committee say that the total amount could be substantially less after the Government pays for defaulters and pays subsidies to the purchaser to ensure that graduates are charged low rates of interest. The net gain from the sale will go to the Treasury. The money has not been earmarked for further and higher education.

Fury over Government tactics

"It would be indefensible to require present and futuregenerations of students to contribute if there was no direct improvement in the funding position of higher education," Martin Harris, chairman CVCP.

"It confirms what we have said all along - there is no logic in levying fees in higher education. One of our greatest fears is that top-up fees are now firmly back on the agenda," Douglas Trainer, NUSpresident.

"If student fees have been introduced to reduce Government expenditure, it will do nothing for the universities," David Livesey, secretary of the General Board, University of Cambridge.

Institution reactions and sale of student debt, page 3

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