‘Sticking plaster’ inflationary fee rise ‘will buy sector time’

Indexing tuition fees to inflation could turn out to be only a “sticking plaster” for English universities, particularly if calls for more public subsidy fail to cut through, experts have warned.

Speculation has grown that the Westminster government is preparing to marginally increase fees every year for the next five years, eventually reaching £10,500 a year from the current £9,250.

While it would be the first time fees have risen since 2017, the plans – reported by The Times citing government sources – would still leave many institutions in deficit because analysis has found that about £12,500-per-student is needed for them just to break even. 

Universities UK’s blueprint for higher education published on 30 September envisaged the gap being made up by more public subsidy via increases to the strategic priorities grant.

But Nick Hillman, director of the Higher Education Policy Institute (Hepi), said this was far from a given.

“The teaching grant tends to go down rather than up over time so I wouldn’t set huge store on that,” he said. “I’d rather see fees get back, in real terms, to something closer to £9,000 through annual increases a bit above inflation.”

Mr Hillman said it was a “big achievement” that university leaders had managed to coalesce around a proposed solution for raising teaching income but, given the way inflation had “eaten away” at the fee for several years, the plan risked enshrining lower-value fees for the long term.

“It's like saying we’re content with [former Labour leader] Ed Miliband’s plan back at the 2015 election to have fees worth £6,000 in real terms for evermore. I'm not convinced that will deliver enough for a really good student experience.”

Diana Beech, chief executive at London Higher, which represents universities in the capital, said inflationary rises would give institutions a “much-needed financial boost as the economic environment worsens” but warned that the “real-terms value of these fees will only continue to erode as the years progress”.

“Unless more ambitious proposals are put forward soon to build on these initial fee rises, they will merely be a sticking plaster over the sector’s deep-seated financial wounds,” Dr Beech added.

She said any public funding that was forthcoming should be allocated “in line with the real-terms cost of operating in each region so institutions in high-cost cities like London can cover their higher cost bases”.

Universities have come under pressure to align with the government’s priorities on growth and skills to as they build their case for more public funding.

UUK’s blueprint also said universities would need to find new ways of articulating their impact and value for money.

Jess Lister, associate director (education) at the consultancy Public First, said institutions will need to “make a proactive case for public support which should not be taken for granted”.

But while “electorally unpalatable initially”, she said a “slow and steady” fee rise over the course of the parliament “should buy the sector some time to stabilise finances in the short term and…is unlikely to have any widespread impact on overall enrolments”.

tom.williams@timeshighereducation.com