Privatisation: v-cs think the unthinkable

September 8, 2000

Voluntary privatisation of universities and deregulated tuition fees are among options for radical changes in higher education funding to be considered by vice-chancellors next week.

A call for the reinstatement of maintenance grants and other measures to support poorer students, at an estimated cost of Pounds 300 million a year, is also included in a discussion paper to be tabled on Wednesday at the Committee of Vice-Chancellors and Principals' annual meeting in Leeds.

The paper, produced by a CVCP-appointed review group chaired by Sir William Taylor, invites vice-chancellors to say where they stand on a wide range of funding options.

It also asks them what criteria they think should be used to decide which systems to support - including acceptability to students and parents, levels of income generated, electoral risk to the government and Euro-compatibility.

The meeting will provide the CVCP with the first opportunity to gather members' views on future funding after July's controversial Russell Group paper, which argued for the introduction of differential fees.

The CVCP will use feedback from workshops at the meeting to decide which options are worth more analysis and which might be promoted in a campaign to secure political commitment to a second Dearing-style higher education review in the next Parliament.

On higher tuition fees, the paper says: "The differences of view and diversity of interests associated with these issues require an extended debate about funding options and argue against a rush to judgement."

Many of the options in the paper would amount to a revolution in funding, including:

* Institutional opt-out. Universities and colleges could elect to become privatised, with all fees deregulated. They would get a one-off payment of a multiple of their annual funding council grant and no further government funding for teaching. Money would have to be set aside for bursaries for 20 per cent of undergraduates

* Increased upfront tuition fees, backed by income-contingent loans and individual learning accounts with funds from public and private sources that could attract tax relief. Students could agree to give 1 per cent of salary once their income reached the higher tax rate threshold to help build an endowment fund

* Annual tuition fee rises above inflation. Fees increased by 10 per cent each year, with means-testing as applied now. Government pledge to maintain per capita funding in real terms for four years, followed by review. Institutions to admit up to 10 per cent more full-time undergraduates a year

* Institutions set fees for an agreed proportion of places on specified courses. Government commitment not to include private income when determining levels of public support

* Full-cost fees and scholarships. All universities set fees differentiated by subject and institution, backed by a means-tested bursaries fund administered by an independent trust, and income-contingent loans

* Graduate tax. Deferred contribution levied through taxation on graduates, ceasing when the agreed contribution has been paid. Employers might be free to contribute and students paying upfront might get a discount.

A Cubie-style fee-abolition option has not been included, the paper says, "given the important part that tuition contributions now play in higher education finances, and that the cost of compensation for their loss in England and Wales would be circa ten times that in Scotland".

But the paper suggests that even building on existing funding policies should mean making significant changes.

These might include maintenance grants for mature students, doubling the funding premium paid for widening participation, extending loans to part-time students, and new money for improving student:staff ratios and completion rates of non-conventional students.

The CVCP has estimated that universities need an extra Pounds 5 billion over the next five years to sustain core funding, continue expansion and widen access, improve teaching and research, and modernise staff pay.

CVCP conference key issues

* Funding options

* Widening access

* Spending review 2000, particularly the lack of settlements for 2002-04

* University accountability

* Equal opportunities, including the Bett report recommendations

* Research and the RAE

* CVCP corporate plan

* Education secretary David Blunkett's speech on Thursday.

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