As seen on Dale & Co: Why the Coalition is muddled but right about tuition fees

by Stephen Tall on July 13, 2011

Here’s my debut post for Iain Dale’s new group-blogging venture, Dale & Co, published yesterday:

It’s official: Offa has today announced that 47 out of 123 universities in England will charge fees of £9,000 a year for all undergraduate courses. A maximum fee level that was supposed to apply only in “exceptional circumstances” is in reality being levied by more than one-third of higher education institutions.

On the face of it, this is a disaster for the Coalition Government. The average fee is rising to just over £8,000, but the Government’s finances were based £7,500 – that’s a costly difference to the public purse given student debt is going to be under-written by the taxpayer. And, as Labour’s shadow universities minister Gareth Thomas has been quick to point out, “Not one university that increased fees to £9,000 has been told to lower their fees and not one access agreement has been rejected.”

A muddle not a failure

So is it time to write-off the Coalition’s higher education finance reforms as a failure? No. They’re a muddle, that’s certainly true; perhaps that’s an inevitable result of Coalition government, where the middle ground occupied is not the territory either the Conservative or Liberal Democrats would choose. The Tories would have preferred to leave it to the market to settle fee levels. The Lib Dems would have preferred no rise at all. The compromise reached? Fees are rising, but are still capped by government.

This half-way house of the £9,000 cap has given rise to a perverse and unintended consequence: that 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 – 47 universities have congregated at the top of the scale, afraid of being seen as ‘inferior’ to their peers if they don’t.

I strongly suspect that if the Lib Dems had been content to leave the higher education fee market to look after itself, average tuition fees would have converged towards the £7.5k the Government initially expected, or even lower.

Reforming universities: the bigger picture

But the feel level is only part of the story here. The authorised version of the Coalition’s rationale for higher education finance reform is that, at a time of austerity, the nation can no longer afford to subsidise universities as it has done in the past. Fee rises, it’s argued, are part of the deficit-reduction measures which are biting all sectors of society. It’s sad, lament the Coalition, but necessary.

In the short-term, however, the political imperative for the taxpayer to under-write the shift from public- to private-funded university teaching means that the increase in fees are likely to cost the government more money than is being saved by cutting back on core funding. In other words, the Coalition’s fees policy, a de facto ‘graduate tax’, is contrary to the stated number one Coalition priority of eliminating the deficit by 2015.

Why, then, is the Government going down this road? Put quite simply, Vince Cable and David Willetts both know that injecting market forces into higher education will be the only way that reform of universities will happen.

Labour under Tony Blair attempted to reform through targets, such as the arbitrary figure of 50% of school-leavers entering university. The Coalition is moving away from the ‘men in the ministry’ approach that says government knows best, and instead allowing the market to determine which teaching courses will survive, with professional degrees such as MBAs (where there is a high premium) costing more than, for example, humanities degrees. Rather than the government advocating the abolition of so-called ‘Mickey Mouse degrees’ (the ‘golf course management’ type degrees the Daily Mail loves to hate), it will be left to universities to prove they are of worth to those who’ll foot most of the bill: the students.

The fate of universities themselves will no longer be a matter for the government: it will be for universities to demonstrate through their own ability to attract students that they are successful. The government will not have to take on the universities – demand that they streamline or offer more flexible degree courses – because their governing bodies will now have to be responsive to the needs and wants of their current and future students in order to survive.

Market forces have been unleashed within higher education. Those that can respond effectively will thrive; those that are unable to do so will fail.

This is the real revolution in universities, of which the debate over tuition fee rises is simply the most publicly combustible element. Unsurprisingly, many in higher education are deeply opposed to the Coalition’s policy. My own university, Oxford – where I was a student and am now an employee – last month voted overwhelmingly in favour of a motion of no-confidence in Mr Willetts.

What I think

As a Lib Dem and as a university employee you might expect me to support such disapproval of the Coalition’s record on universities. I don’t. There are two absolute fundamentals I do believe in, however.

First, that our universities must have the funding to continue be world-class. Currently the UK punches above its weight in the world rankings of universities, with 14 of the top 100 according to the Times Higher Education. It is clear in the long-term that the state can no longer afford to do so, therefore private funding is crucial.

And secondly, that every student with academic merit and potential must have the opportunity to study at university. There has been a boom in student numbers across all social demographics in recent years, even since Labour introduced tuition fees. Under the Coalition’s reforms, all students will pay less in annual repayments than they have under Labour’s student funding arrangements; there is, therefore, every reason to believe that students who look carefully at the figures will recognise there is real long-term value from the opportunities university education can open.

Are the Coalition’s higher education policies muddled? Yes. But is the direction of travel absolutely right? Yes again.