June 9, 2010 3:00 am

Warning over obstacles to tuition fees rise

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A substantial rise in tuition fees - seen by many universities as the answer to their financial shortfalls - may be "undeliverable" because of opposing views within the coalition government, the top spokesman for universities has warned.

The assertion by Steve Smith , president of Universities UK, throws into doubt leading universities' core strategy for maintaining their international preeminence.

It also underlines the tension bubbling near the surface in the new Con-Lib coalition. The Conservatives supported the last Labour government's appointment of a review led by Lord Browne of Madingley to look at student finance, including the possibility of raising fees. However, the Liberal Democrat election manifesto opposed tuition fees altogether, and the party also attacked last year's creation of the Browne review, which is expected to report as early as next month.

In an interview with the Financial Times, Prof Smith said he envisaged the Browne review recommending a rise in the maximum fee level to £5,000 a year or above, because "most people" submitting evidence to Lord Browne "seem to think that a rise in fees has to happen".

Universities UK itself recommended a rise in tuition fees last month, when publishing its submission to the review. Fees, which are £3,225 annually, are progressively paid off by students after they graduate.

However, having observed the changing political situation over the past few weeks, Prof Smith has made an about-turn. He suggested a recommendation for fees to rise was likely either to fail in parliament or at an earlier stage, since "it would be a very odd thing if David Willetts [Conservative minister for universities] proposed legislation to the Commons and his secretary of state [Liberal Democrat business secretary Vince Cable] had to abstain". He concluded: "The danger is obviously that Browne might prove undeliverable."

Prof Smith warned of the "nightmare" that when ministers publish their emergency cost-cutting Budget on June 22, it would include swingeing government cuts of hundreds of millions of pounds in university funding made on the false assumption that universities could make up the money through fee hikes recommended by the Browne review.

He proposed instead that the Browne review raise money for universities by recommending an increase in the interest rate on loans made to students to a real-terms rate of 2.2 per cent - close to the government's cost of borrowing. The current real-terms rate is zero. He said this would save the government hundreds of millions of pounds a year, some of which must be "reinvested" to save universities.

If universities were forced into cuts, Prof Smith warned, institutions might boost the number of international students at the expense of home students.

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