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.

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10 comments

New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR

by Stephen Tall on March 30, 2011 at 8:33 am. Reply #

RT @stephentall: New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR

by Nick Thornsby on March 30, 2011 at 8:44 am. Reply #

RT @stephentall: New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR >> An original, interesting take on fees

by charlotteahenry on March 30, 2011 at 8:45 am. Reply #

RT @stephentall New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR

by HouseofTwitsLib on March 30, 2011 at 8:45 am. Reply #

RT @stephentall New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR

by House Of Twits on March 30, 2011 at 8:45 am. Reply #

RT @HouseofTwitsLib: RT @stephentall New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR

by Anna on March 30, 2011 at 8:46 am. Reply #

RT @charlotteahenry: RT @stephentall: New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR >> An ori …

by Stephen Tall on March 30, 2011 at 9:01 am. Reply #

RT @charlotteahenry: RT @stephentall: New post: Tuition fees and the law of unintended consequences http://bit.ly/i1KAHR >> An ori …

by Joe Jordan on March 30, 2011 at 9:28 am. Reply #

This is an interesting idea, but I think if the macro-economic argument is correct – universities fear lower fees look inferior – it supports the concerns I (and I guess many others) had that universities are not normal goods and hence we’ll just see a lot of fee inflation.

If on the other hand the universities are mistaken then surely it will sort itself out next year or in coming years, as those universities overcharging will not fill their places?

by Matthew on March 30, 2011 at 6:59 pm. Reply #

.@KelBlundell That said, @stephentall makes a good argument that the cap has actually resulted in higher fees: http://is.gd/3rMyZ2

by Niklas Smith on April 1, 2011 at 8:05 am. Reply #

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