Three cheers for fees but what about growth?

January 31, 2003

Fees have dominated the white paper debate but, says Lord Dearing, every aspect of higher education will be affected

Charles Clarke's predecessor as secretary of state for education pulled off a coup by getting an extra £12 billion for education over the next three years. No one could have realistically expected a better outcome. But to meet the bid by higher education for an extra £10 billion, with the rider that it really needed £14 billion, would have emptied the pot.

Like my committee before him, Mr Clarke has looked around and concluded that he must turn to graduates, as the direct beneficiaries of higher education, for income-contingent contributions after graduation to help fill the funding hole for the universities.

Is that fair? Skipping the important details for the moment, I think it is.

Higher education is life enhancing and usually - but not always - leads to better pay and less risk of unemployment. It is not available as a right to all citizens. In our society the educationally talented have a much better deal than the rest, and equity points to their putting something extra into the pot when they are earning. Even after the present proposals for graduate contributions (as long as these are on an income-contingent basis, and with the threshold for starting repayments raised from £10,000 to £15,000), higher education will usually remain a good investment. But because not all will reap much of an economic dividend, I would put a cap of 20 years on the need to make repayments.

Like everyone else, I worry that financial obligations will deter students, especially those from poor families - and some less well-off middle-class families too. That is why, in 1997, my committee recommended retaining maintenance grants and I am glad that the government has come back to our recommendation, albeit for a smaller sum. And it is to the good that the £1,000 grant is going to be introduced two years before the new levels of fee. It is also to the good that the educational maintenance grants of up to £1,500 for 16 to 19-year-olds are to come in, countrywide, in 2004. In all, over a period of five years, at the top rate the grants will come to £6,000. I would have liked still more on the grants front, but this is a big advance.

The Russell Group is said to be going for the full £3,000. One of the ideas pushed by my committee was of compacts between institutions, students, society and the government. We need binding compacts for access on merit, supported by more bursaries, financed from the fees. Without that, for me, no deal.

The $64,000 question is how the sector as a whole will react to the new levels of fees. It is going to be far from a sellers' market. One of the key sentences in the white paper is that there will be virtually no money for expansion of traditional three-year degree programmes for six years.

The funding will be for foundation degrees, and the further education colleges will be big players in that market. All my experience is that institutions will compete for more students. In a no-growth situation, that will put pressure on fees. Institutions that have traditionally taken low-income students are going to have the benefit of the increase in postcode premium from 5 per cent to 20 per cent of the costs of tuition. So watch out as they weigh up the market, go for market share and thereby put pressure on fees. That would resonate all the way through the market. Some Russell Group institutions may have to think again.

I would have preferred to move via two steps to the new levels of fee, testing the ground, rather than straight to the maximum £3,000. But it could be that these competitive forces, and the commitment of institutions to their students and to access, will see Mr Clarke right.

And, anyway, higher education needs the money.

The part-time student is often the afterthought and I should like to have seen more about lifelong learning. But, three cheers for the proposed fee support and £250 grants towards expenses for those on low incomes, studying half of the time.

The financial issues that grabbed the headlines and occupied parliament last week are far from being the only big issues on the table. They bear on the whole structure of higher education; its purposes; and how it can best make its contribution to our economic wellbeing in a decade in which the basis of our prosperity will increasingly be challenged.

Lord Dearing chaired the 1997 National Committee of Inquiry into Higher Education.

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