Why wait till 2009?

January 28, 2005

A Tory government would get much-needed cash to universities fast, insists Chris Grayling

The attacks on Conservative higher education policy in last week's issue were hardly surprising given the politics of the moment. But they were no less misguided for that.

Apparently we do not understand the need to expand higher education. Nor do we understand the importance of academic research or vocational courses, and apparently we intend to cut 155,000 places.

What utter nonsense.

Britain already has a higher proportion of people in university than any other major industrialised nation. More than the US. More than Germany. More than Japan.

Increasing numbers of graduates are struggling to find graduate jobs. And vice-chancellors tell me their resources are spread too thinly - not an obvious moment for further expansion.

But equally it is not a time for cuts. Our policy does not require and will not require a reduction in higher education by a single place. Those who claim otherwise are victims of, or complicit in, government spin.

Valuable vocational work is done in universities - there is little choice at the moment. But we do not need this aspect of higher education to grow.

A stronger local college network would provide the kind of alternative that community colleges in the US offer.

We will address this when we publish our strategy for further education and skills.

The importance of universities to our future is undisputed. We face challenges from low-cost economies, and we can flourish only through innovation. Universities have a crucial role to play in that.

Vice-chancellors have won the argument that funding must rise. The only question is how. The Government's proposals provide extra money, but at a price. That's because students won't in fact pay fees - the Government will.

The Government borrows billions in the markets, at a rate of some 5 per cent, and then lends to students at a rate of about 2.5 per cent - recouping the money over more than a decade.

The cost is immense - £660 million a year to subsidise loans for students to pay fees post-2006 and £450 million for grants to compensate the poorest students.

So the taxpayer ends up spending £1.1 billion a year to raise £900 million for universities.

We believe there is a better and quicker way of getting money into higher education. We have set out three priorities for universities:

* A sharp rise in annual income

* Capital investment to tackle the shabby state of many campuses

* Support to build endowments.

Scrapping the subsidy for all student loans and fee remissions would save £2.2 billion a year, enough to replace tuition fee income in its entirety, from 2006, not 2009.

We would have enough left to give universities the existing student loan book - billions of pounds due to be repaid over the next 15 years.

That would fund a £3 billion investment in teaching facilities during the next Parliament.

It would also provide £500 million a year for 18 years to build endowments, enabling us to match every pound universities raise themselves.

Our plans aren't just about money though. We would stop government interference in the running of universities and dismantle the bureaucracy that frustrates so many.

A voucher system of national scholarships would ensure that funding follows the student.

Universities would have the freedom to decide how many to admit, the system of block-grants would end, the bidding for small pots of money would be curtailed and overinspection would cease.

Many people attracted to fees and the market have challenged our policy.

My view is that Conservatism must also be about value for money. I also suspect they have never looked at the detail.

If University College London, for example, became a US-style private university and charged the same tuition fees as Harvard University, it would get only £9 million more than our scheme would deliver in recurrent annual income.

Our proposed boost to its endowments makes a much bigger difference, as would moving to 100 per cent full economic cost for research.

But that's my next priority.

Chris Grayling is the Conservatives' higher education spokesman.

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