Ex-ministers warn Treasury will not make up funding if fees cut

The Augar review’s call for the Treasury to replace in full the university income lost through cutting tuition fees in England to £7,500 is “implausible”, meaning that there is a risk that the fee cut could happen independently and universities must fight to avert that, according to former minister Lord Willetts.

Jo Johnson, who fiercely opposed Theresa May’s plan to review sector funding in his time as universities minister, agreed that there would be “real doubt” that the Treasury would provide extra direct funding for universities. And if such resources were provided, they could end up as a politicised “slush fund for the ministerial project du jour” rather than a sustainable funding stream for universities, he warned.

The comments from the two most influential recent Conservative universities ministers, in interviews with Times Higher Education, emphasised the scale of political opposition to the post-18 education review panel’s plans on higher education funding. Lowering the fee cap to £7,500 would require a vote in the House of Commons, where the Tories lack a majority.

The review panel, led by Philip Augar, said in its report to the government that the maximum tuition fee that universities can charge students should be cut from £9,250 to £7,500 by 2021, with the Treasury replacing the lost fee income “in full”. However, the extra public funding should be targeted at subjects that cost more to teach and have greater “social and economic value”, the panel said.

Lord Willetts praised the review for looking at the post-18 education system “as a whole” and for recommending the return of maintenance grants.

But he said the idea that the Treasury would provide full replacement funding to cover a fee cut was “implausible”. “I just don’t see that as credible,” he added.

That could raise the prospect of a future government seeking to implement the fee reduction without the replacement funding, delivering a huge cut for universities.

“We mustn’t be complacent,” said Lord Willetts. “There is a risk that it [the fee cut] happens.”

There has been “a loss of public and political trust in universities”, meaning that universities must “build links and create understanding with their local MPs, their local councils, with local employers”, countering “classic mistakes” such as the view that “technical education doesn’t happen in universities”, Lord Willetts continued.

Lord Willetts warned that there was a “narrative” espoused by a small number of people within the Conservative Party that holds that the party’s “problem” at the 2017 general election “was not Brexit and wasn’t the quality of the campaign…but it was Corbyn trumping Conservatives on fees”. In this narrative, “cutting fees is the way to win younger voters”, said the peer.

He added: “There might be [Tory] leadership candidates who decide that they should endorse Augar.”

But the potential implementation of a fee cut was “not something to predict now, it’s something where universities’ own behaviour in the next 12 months is going to be important in winning the public battle”, he said.

On tuition fees, Mr Johnson said the Augar report raised “the issue of the level of tuition fee” but then only “tinkers around the edges”.

“If you think tuition fees are a problem, lowering them by [£1,750] isn’t a solution,” he added.

But this plan then “creates issues of what’s going to happen to the lost funding for universities”, Mr Johnson continued. “I don’t think Philip Augar can really bank on any Treasury assurance he receives that the money will be backfilled.”

Although the Augar panel coupled together the fee cut and replacement funding, Mr Johnson said it was “highly unlikely they would go in tandem” in reality. He added: “Any government that implemented this – and I think there’s a big question mark over whether any government ever would – would leave the Treasury to fill in the spaces, but…I think there’s a real doubt as to whether the money would be found.”

Even if such funding were found, there would be “a real risk that it ends up being a slush fund for the ministerial project du jour”, Mr Johnson continued. “It would not be a sustainable stream of funding that would enable universities to plan programmes [and] plan hiring across departments,” he said.

If the fee cut plan proves too problematic for the next prime minister to implement, could it end up in the Tory manifesto for the next general election?

Mr Johnson, whose brother Boris is a front-runner to be the next leader, said that should not be “taken for granted”.

The Augar report was “a contribution to a debate, but there will be many other perspectives on this question”, he added. “I don’t think we can assume it will become party policy – but that’s a matter for whoever ends up leading the party.”

john.morgan@timeshighereducation.com