The fees English universities are allowed to charge home students in England are fixed by government fiat. At £9,250 per year, they are some of the most expensive in Europe. Shortly after the election Education Secretary Bridget Phillipson denied any plans to raise them. She appears to have changed her mind, saying the fee has been ‘eroded’ because it hasn’t gone up in a ‘very long time’. Officials are reportedly drawing up plans to raise the fee to to £10,500 over the next five years, thereby tracking inflation. They are right to do so.
In the end, some future Education Secretary will have to swallow an unpalatable pill
Put bluntly, the universities need the money. The 24 elite Russell Group institutions, it is said, currently lose roughly £2,500 on average for every home student. Other less prestigious organisations with less overheads may lose less, but many will still not break even. Most universities are already in a fairly precarious financial state. It is an open secret that at least six, including two in the Russell Group itself are close to insolvency. In the absence of wholesale government largesse, which would undoubtedly be vetoed by Rachel Reeves and the Treasury, there is actually not much choice other than raising fees when it comes to staving off even worse financial difficulties.
Secondly, inflation affects universities’ expenditure as it does anyone else’s, if not more so. They have a converse right to expect an ability to plan on the basis that their income will also rise. Their permitted fees have been frozen for the last seven years for political reasons. The result has been a tailing-off in quality of both teaching and research, and increasing dependence on large-scale but not entirely reliable foreign recruitment. It has also led to institutions becoming far too close for comfort to some dodgy sources of finance which may compromise their independence, such as cooperation agreements with a cash-rich Chinese government anxious to increase its soft power and ruthless in exploiting new ways to do so.
It is also good for a third reason. Nominal or very low university fees, as in many other European countries, are all very well. But they mean, essentially, that universities are dependent on government for all their non-research income, and the payer of the academic piper can be tempted to call the political tune. In Scotland, for example, which boasts free college tuition for Scots, it was pointed out a couple of years ago that it was becoming enormously difficult for anyone to get into Edinburgh Law School unless they were a member of a disadvantaged group. Where fees come from students, even if those fees come indirectly from government in the form of grants and loans, universities have a good deal more independence and freedom of manoeuvre.
So much for the good news. Unfortunately there are also bad omens. The most important is a long-term risk to government finances. If you ask who pays home students’ fees, the answer in the overwhelming majority of cases is actually the taxpayer. True, the payment takes the form of a student loan, which has to be repaid with interest through the tax system, by way of an extra charge of 9 per cent on all income over £25,000. But loans are wiped, even if not repaid, after 40 years or on death. Low earners pay nothing – and even a person on average earnings, roughly £36,000, will probably not pay enough overall in 40 years to clear the loan with interest. Since any increase in university fees will almost certainly be matched by an increase in the amount of the student loan, we are likely to see an increase in irrecoverable loans for which the taxpayer is on the hook.
In the end, some future Education Secretary will have to swallow an unpalatable pill. The country cannot afford to guarantee ever-inflating fees with the risk of non-payment for such a large number of universities in England, some of distinctly questionable quality, with so many students.
It also spawns ever-increasing numbers of workers burdened with eye-watering debt, with a noticeable proportion of their income going to the taxman and not into the economy which needs it.
This is unsustainable, both socially and, in the end, electorally. We currently have too many second-rate universities, and too many students inveigled into enrolling in them at large expense to themselves, the taxpayer, or both, and little advantage to either themselves or society at large. This needs to change.
We can afford, and indeed need, a smaller number of good universities, with generous support available both to them and their students. If we do not take steps to get our house in order in this way, we are on course to setting our higher education on a permanent course to yet more managed decline. Bridget Phillipson, one suspects, quietly knows this. Whether she will act on her knowledge, or whether the Labour party will ever let her, is unfortunately very doubtful. Education is still in for a rough ride.
Comments