Fees and funding just might push everyone to the breaking point

Devolving power to regional assemblies in Scotland, Wales and Northern Ireland makes sense only if they can opt to differ on some policy matters. But are there tolerance limits? Higher education policy has diverged since Scotland went its own way on tuition fees in 2006 - but change and disruption on a completely different scale loom on the horizon.

Northern Ireland is a net exporter of students: in the 1990s, 40 per cent of students left for other parts of the UK. A government decision to lift the cap on undergraduate numbers at the two local universities allowed more students to stay, but there was a drop in the number of students coming from the Republic of Ireland when £3,000 fees were imposed in 2006. The overall pattern of student flows has remained stable, but this could be about to change.

The situation currently facing Northern Ireland's universities is uncertain. We are the only region in the UK where the government has yet to agree on the level of fees (currently £3,375 a year) to be charged to home or other-UK students in 2012, on the level of funding for higher education, and on the level of support for Northern Irish students going to university in England, Scotland or Wales.

During the 2011 Northern Ireland Assembly election campaign, all but one of the political parties opposed any rise in fees. In one of those ironies of politics, Stephen Farry, the minister for employment and learning, who carries responsibility for higher education in the five-party coalition, is from the Alliance Party, the only party prepared to countenance an increase in fees. However, he needs the support of the Democratic Unionists and Sinn Fein to move any proposal into law.

The policy challenge is simply stated. The budget approved by the Assembly just before the May election included a £68 million reduction in the higher education allocation; £28 million of this was identified as an "efficiency saving" that the local institutions had to find. Options were mooted to mitigate the remaining £40 million cut, including a rise in fees, but this option was removed during the election and none of the other proposed solutions was deemed adequate. It is now widely assumed that fees will remain at their current levels, subject only to inflationary increases.

Attempts to help higher education by top-slicing other government departments appear to have failed, so the only remaining option may be a reconfiguration of the Employment and Learning budget - a challenge at the best of times, but immensely difficult at a time of rising youth unemployment.

A small element of subsidy could be gained by charging higher fees to incoming students, but unless the price is significantly below that offered by English universities, its impact will be limited; and if the price is set too low, Northern Ireland could be overwhelmed by an influx of English applicants that drives out local students.

The level of demand for places in Northern Ireland is likely to swell in any case as more students seek places at home to avoid higher fees elsewhere in the UK - but every extra 1,000 places puts another £5 million dent in the higher education budget.

As the Assembly returns to Stormont next week, an optimist might hope that it will decide to maintain the overall level of investment in higher education without increasing the private contribution so as to make clear its commitment to quality higher education. Such a move would also recognise the key role of higher education in encouraging sustainable economic growth and in the knowledge economy.

But a pessimist might imagine a scenario in which higher education becomes more insular while investment plummets. Within Queen's University Belfast, the efficiency savings require that 200 posts be cut. Implementing them in full will mean that schools must close, many posts must be declared redundant and the range of programmes available to students must be reduced. This will lead to a brain drain as the brightest and best among our young people leave Northern Ireland to study in better-funded universities.

Northern Ireland has made generational investments to produce two outstanding universities, with world-class standards, that enrich our community through complementary strengths. Failure to address the £40 million disinvestment in higher education in a sustainable way places higher education in Northern Ireland at immediate risk.

And while we are preoccupied by the implications of decisions (or lack of them) in Northern Ireland, who is keeping an eye on the bigger picture? If the Celtic regions seek to mitigate their financial problems by charging higher fees to English students, might there be a political backlash at Westminster? And while everybody grapples with the consequences for their own region, who is looking after the strategic role of higher education for UK plc? Do we risk breaching the limits of tolerance?