Universities in the UK desperately needed Bridget Phillipson’s announcement this afternoon of a rise in tuition fees. The Education Secretary has said they will rise from £9,250, to £9,535 next year and £10,500 by 2029. This was necessary if only to offset the effect of last week’s Budget announcement of a 1.2 per cent rise in employers’ NI and the reduction in the threshold at which it becomes payable; that alone will saddle them with extra costs of just under £400 million a year.
What is unsustainable is the number of students the state chooses to support
All this aside, the institutions are already in deep trouble. Fees for domestic students do not cover costs. The previous practice of trying to make ends meet by an increased recruitment of higher-paying foreign students, relatively successful until about five years ago, has become more difficult. The removal by the outgoing Tory government of foreign students’ rights to bring extended families with them was entirely understandable – but it did have the side-effect of reducing the attractiveness of UK universities. The universities’ bind has been made worse by increased competition from other English-speaking institutions elsewhere, and also by the unfortunate collapse of Nigeria’s currency, with the country up till now the source of many overseas applications.
The result has been a dismal process of more cost-cutting and a decline in quality. It is well known that a number of institutions are effectively insolvent, including some relatively high-profile ones. And even among those that are not, we are hearing of an increasingly industrial process of instruction, with vastly inflated student numbers. Tutorials, the small-group teaching that used to mark UK universities out as a seriously quality product, have meanwhile been reduced to online sessions held over Zoom with groups of up to 50 students at a time.
Will Bridget Phillipson’s announcement help universities? To give her credit, we must admit in some ways that it will. Even if offset by the extra NI costs, the absolute increase in income will remove some immediate pressure – even if the money will not flow into the coffers for nearly a year. Further, the recognition that the amounts paid to universities should be closer to the costs they actually incur in educating students injects some necessary realism into their finances. Also welcome is the recognition that fees need to increase with inflation in the same way as universities’ costs do. The figure of £9,250 has not risen for seven years: while explicable for political reasons, this is clearly unsustainable.
However, we are not out of the woods yet. The announcement from the Department for Education is only a temporary solution; the malaise remains.
First, to some extent, this amounts simply to sending the bill for present expenditure to future generations of students. The average student already graduates with an eye-watering debt of between £40,000 and £50,000. Since in the vast majority of cases the increase in fees will be covered by student loans, this millstone round students’ necks is likely to get progressively heavier over the next few years.
Secondly, even if in theory the extra costs will be covered by those students who choose either to pay up-front or borrow the money to invest in their educational qualifications, future taxpayers as whole are on the hook for fairly substantial sums. Not all student loans are paid off; recipients may either disappear or go abroad, or not earn enough to trigger a duty to repay. In any case, amounts owing are written off after thirty years or (if earlier) when a student reaches 65. To this extent, therefore, the can has merely been kicked down the road as regards sustaining universities in the long term.
Thirdly, there is no guarantee that this will be enough to prevent a need for an immediate bail-out of those institutions that are facing insolvency and cannot wait until 2025. So long as universities are seen as too important to be allowed to fail, the Treasury may still find itself faced with the necessity to come up with further funds to prevent this happening.
No one likes to admit it, but in the long term what is unsustainable is the number of students the state chooses to support and the number of higher education institutions that educate them. There is already a growing appreciation that too many people engage in university education, at great expense to themselves and the taxpayer, and then regret it.
Sometime in the next ten years, an education minister will need to grasp this nettle and announce in the House of Commons that a number of the less successful universities will be allowed gently to fold when the present cohort of students has passed through. It would be nice to think that Bridget Phillipson was the minister with the courage to do this. Somehow, unfortunately, one doubts it. For the moment at least, we are stuck with the dreary status quo of gentle decline caused by too little money spread too widely, and a refusal by government to take the political risk of doing anything about it.
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