‘Treasury win’ kicks funding worries down post-election road

The Westminster government’s higher education reforms have merely delayed “the difficult questions”, leaving English universities under-resourced and the winner of the next general election facing big questions about how to fund them, sector figures warned.

Ministers finally published the government’s much-delayed response to the Augar review of post-18 education last week, announcing changes to student finance that will force graduates to repay more of their loans, saying the moves would put the system on a “more sustainable” footing, and launching consultations on plans to introduce student number controls and a minimum entry requirement to qualify for student loans. The government also announced that the tuition fee cap would be locked at £9,250 for a further two years – up to and including 2024-25 – delivering a blow to universities on funding via a freeze that will total at least seven years.

Sir Chris Husbands, the Sheffield Hallam University vice-chancellor, said the “big winner” was the Treasury. “By 2025, the 2012 [when fees were raised to £9,000] purchasing power of the student fee is about £6,500,” he said. “That’s a long-term attrition on resource.”

Andy Westwood, professor of government practice at the University of Manchester and a former Treasury adviser, agreed the exchequer had “saved significant expenditure now and in the future, via the reforms to the loan book but also via access to the loan book and frozen fee levels”.

The planned lifelong loan entitlement (LLE), which will provide loans for people to upskill throughout their working lives via modular courses, has been welcomed by universities, but could be seen by ministers as, in part, a means to divert demand away from full degrees into shorter, cheaper courses.

“The LLE commitment and consultation is a long way into the future and very open – it’s not due to happen until 2025, after the next general election and the next spending review,” Professor Westwood said. “It’s clear that there will need to be a significant amount of work done to meet this in a meaningful way – and it will all be subject to the next spending review and the political appetite of whoever is in office at that time.”

Sir Chris also suggested that by increasing the student loan repayment period from 30 to 40 years, the changes turned the loan “into a graduate employment surcharge on tax” and could advance the case for a graduate tax.

As “the best-paid graduates will pay off their loan in 15, 20, 25 years – why not go the whole hog and make this a graduate tax so that the better off also pay through their working life?” he asked.

Diana Beech, chief executive of London Higher and a former adviser to Conservative universities ministers, called the package a “sticking plaster”, as the fee freeze means “we risk leaving our institutions under-funded and under-resourced” by the time of the next election.

“With the predicted rise in demand for higher education, this will be a problem that the next government will not be able to ignore, although we must caution that it may not be blessed with the parliamentary majority experienced by this government in order to make significant changes swiftly and easy. The whole thing [the policy package] smacks of a missed opportunity,” she added.

Sir Chris said the fee freeze means either that “whoever wins the next election has to persuade the Treasury to unwind what they have done today and increase fees, and increase them by a lot”.

Or, he continued, that “whoever wins the next election has to urgently set up a review of how we fund a successful, sustainable, inclusive higher education sector. So what the package essentially does is to kick the difficult questions down the road.”

john.morgan@timeshighereducation.com