English universities face major losses under fee cut plan

About a dozen English higher education institutions could lose at least 10 per cent of their income if tuition fees were cut for non-science courses, Times Higher Education analysis suggests.

Concerns have been growing that the government is looking again at cutting maximum undergraduate fees from the current £9,250 to £7,500 – with replacement funding then only directed towards subjects perceived to have more value – as a way to cut the spiralling costs of student loans.

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The THE analysis, which looks at UK undergraduate numbers in non-science courses at English universities last year to estimate the potential impact, suggests that such a change would represent a major loss of income for some institutions.

About a quarter of universities would lose at least 7 per cent of their overall income, based on the latest available financial data from 2018-19, with about a dozen seeing a dent of more than 10 per cent.

Most of those that would be most acutely affected by a targeted fee cut would be institutions with a specialist focus on teaching arts and other non-science courses such as business and management to a mainly British body of undergraduates.

According to the analysis, Buckinghamshire New University could lose about £14 million, which represents roughly 16.5 per cent of its 2018-19 income, due to about three-quarters of its UK undergraduates being on non-science courses.

Nick Braisby, the institution's vice-chancellor, said that he welcomed the “spotlight” on the different funding choices faced by the government but “cutting the fee cap and student loans for arts programmes would be short-sighted and represent a bad business decision for UK plc”.

Gordon McKenzie, chief executive of GuildHE, which represents a number of specialist institutions, said that recent comments by former universities minister Lord Johnson of Marylebone in the House of Lords that defunding arts courses would be a “sad outcome” for society and an “economic nonsense” were “absolutely right”.

Mr McKenzie added that the current need to find savings could have been avoided had the previous government under Theresa May not raised the repayment threshold on loans in 2018 in an attempt to appeal to student voters.

Nick Hillman, director of the Higher Education Policy Institute, which has just published a policy paper suggesting that £4 billion could be saved by lowering the threshold, said that if cuts were “targeted at just one type of institution, the pain will be concentrated on them alone and the risk of an institution falling over will be greater”.

“If that appeals to red-blooded MPs keen to fight a war on woke, I can only suggest they’d find any savings are illusory, as picking up the pieces of a failed institution is not cheap,” Mr Hillman said.

He added that differentiating fees by subject in some way was also “a very odd thing to do as there is no clear or large constituency of support for such a change”, while the argument that an arts course “could be taught well” at £7,500 was now likely to be out of date given the effects of inflation.

THE’s analysis suggests that larger institutions could also be hard hit financially – losses at Nottingham Trent University, for example, could hit £30 million – although this would represent a smaller proportion of their revenue.

simon.baker@timeshighereducation.com