Tuition fees and the law of unintended consequences

by Stephen Tall on March 30, 2011

‘Average university tuition fees will soar to £8,600 a year under the Coalition’s higher education reforms’ — so says Research Fortnight, which has analysed universities’ response to the Government’s post-Browne funding reforms.

This invites the question: Is this a case for greater government intervention? That’s (unsurprisingly) the position of the Labour-supporting Left Foot Forward blog.

But let’s turn the question on its head — is the reason fees will rise so quickly precisely because of government intervention?

When Lord Browne published his original proposals he set no fee cap — deliberately so, in order that the market would find its own level. But the Coalition, in particular to try and address unease among Lib Dems, decided that was a free-marketism too far.

And so the £9k cap was established. But there’s a problem when you set a ceiling — it all too often becomes a floor.

The net result is that instead of an array of universities setting fees reflecting what they can justify on market terms (based on some combination of reputation, teaching/course quality, facilities, financial aid) most universities have congregated at the top of the scale, afraid of being seen as ‘inferior’ to their peers if they don’t.

It’s a perverse conclusion, but one I suspect is true. If the Lib Dems had been content to leave the HE market to look after itself, rather than to intervene, average tuition fees would have ended up nearer the £7.5k the government expected.