Market, what market? V-cs set for race to the top on fees

Lord Browne's proposals for a market in tuition fees could be undermined by most English universities rushing to charge in excess of £8,000 to recoup the losses from cuts in state funding, Times Higher Education has been told.

Vice-chancellors fear that they will have little room for manoeuvre if the government accepts the Browne Review's proposal to impose an increasing levy on fee income above £6,000.

Even if this "soft cap" were rejected and a hard cap of £7,000 introduced, most universities would still be likely to charge that price, in a repeat of the race to the top seen when variable fees were introduced.

Under proposals set out in Securing a Sustainable Future for Higher Education, universities would have to give the Treasury a rising proportion of fees over the £6,000 threshold.

If £8,000 a year were charged, institutions would receive £7,120.

One vice-chancellor, who did not wish to be named, said that given that the average cost per student of a degree course is about £7,000 a year, many universities would charge £8,000 to ensure that losses in public funding were replaced.

It was also suggested that elite research institutions such as the universities of Oxford and Cambridge would set fees at £12,000 a year to ensure their fee income per student reached almost £9,000. Overall, universities would "pitch high" given the difficulties of assessing the impact on demand of elevated fees, the vice-chancellor added.

The same point is made in a letter to ministers from Ruth Farwell and Andy Westwood, the chair and chief executive of GuildHE. The letter says that it could be a mistake to believe that "Browne will catalyse a range of tuition fees and price competition from or within different institutions ... we may find that the majority will end up charging very similar fees."

Other university leaders said that, while it was too early to commit to concrete figures, institutions were likely to cluster around the price needed to replace lost funding.

Malcolm McVicar, vice-chancellor of the University of Central Lancashire, said: "We've got two alternatives - either turn our toes up and die or charge the fee."

Dr McVicar also rejected the idea that universities could make efficiency savings to bridge the shortfall in funding.

"The idea that they can make significant savings and continue to offer a decent student experience is untenable," he said.

He added that the Browne Review was the "wrong response at the wrong time" and would cause "major damage" to the English sector.

David Green, vice-chancellor of the University of Worcester, said that if Parliament accepted Lord Browne's proposals, it was likely that most institutions would charge between £7,000 and £8,000 a year.

Professor Green and Andrew Wathey, vice-chancellor of Northumbria University, added that the Treasury levy - if adopted - would in effect create an upper limit on what universities would be able to charge, but this would promote even more clustering.

"There is a narrow band between what universities would have to charge to recover lost teaching funds and the point at which the sum paid in effect by graduates to the Treasury rather than the university would become unpalatable," Professor Wathey said.

However, Patrick McGhee, vice-chancellor of the University of East London, said it was presumptuous to assume that most institutions would more than double their fees.

"It is not that simple. Every university has to recognise that nothing can be ruled out and nothing can be ruled in. This is not the same as 2006, when most courses went to the full £3,000," he said.

The assessment comes as the sector awaits detailed policy proposals from the coalition government following Lord Browne's report and the Comprehensive Spending Review, published on 20 October.

Vince Cable, the Liberal Democrat business secretary, said the government accepted the "main thrust" of the Browne Review, but was considering a £7,000 "level" for graduate contributions.

THE understands that Mr Cable wants a hard fee cap at that level, but used ambiguous language to avoid angering Conservative colleagues in the government who favour Lord Browne's proposals to remove the cap.

It is also believed that he wants to introduce "progressive" elements into the proposals, such as possible fines for the early repayment of student loans or higher interest rates for top earners.

However, analysts warn that some such measures would be unworkable as student loans would then show up in public sector borrowing figures - a key reason for shifting the emphasis in funding.

simon.baker@tsleducation.com.