After despair of budget, English fee rise brings some hope

The English university sector has become adept at navigating the volatile politics of our age, but the past week has been more topsy-turvy than most.

First, a budget that did little to ease the financial crisis in higher education – and in fact piled more pressure on institutions with a hike in employers’ national insurance contributions that is expected to cost them the best part of £400 million.

The failure to outline how the new Labour government would support a university at risk of bankruptcy, or to aid post-92 institutions with their pension costs, left many in academia lamenting that vice-chancellors had “failed to achieve cut-through” despite their warnings that some institutions are on the brink of going to the wall and others are being forced into deeply damaging cuts.

Then, just days later, came the announcement that domestic tuition fees will rise in line with inflation next year, buying crisis-hit universities precious time to try to get themselves back on a stable footing.

There is a reason for this confusing political choreography. Labour is understandably weary of being painted as putting all of the burden of solving the higher education financial crisis on students, and The Daily Telegraph reported that chancellor Rachel Reeves would have faced pressure to couple a budget tuition fee rise with the reinstatement of maintenance grants, which could cost the Treasury billions of pounds every year.

By announcing the fee rise as an interim measure outside of a fiscal event, it can be presented as a first step towards a much more radical set of higher education financing reforms, possibly including the return of maintenance grants, but also perhaps action on student loan repayment rates and other inequities in the system.

Many sector leaders will welcome the fee rise as a promising first step from Labour, especially as there have been nagging concerns that the Department for Education’s expected focus on early years, schools and colleges would leave little time for addressing the higher education sector’s woes.

The increase in the value of maintenance loans, which have lagged well behind inflation in recent years, will also be welcomed by learners.

It should be clear, however, that one fee rise of a couple of hundred pounds is nothing but a sticking plaster for institutions that have been teetering increasingly closer to the edge in recent years.

The additional income that the fee rise will bring in will effectively be eaten up by the cost of the increase in national insurance contributions.

Some 75 universities have announced job cuts over the past year – about half of the sector – and institutions that were putting their hopes on a rebound in international student recruitment over the summer are likely to have been disappointed.

So, university leaders will have to redouble their efforts to persuade ministers of the vital role that their institutions have to play in driving forward the skills agenda and fostering innovation – and of the need to create a funding system that supports this work.

It remains to be seen how ambitious Labour is prepared to be, and the answer probably depends on how much political capital Sir Keir Starmer has in reserve at a time when he appears to be burning through it pretty quickly, and when priorities such as the NHS will take up so much of the Whitehall “grid”. Politicians rarely come out of major higher education policymaking with much credit from voters.

Ultimately, England’s higher education system needs more money going into it, but questions of economics, fairness, and emerging signs of waning interest in university study mean that it would be unwise to lean too much further on the student purse.

Nor does it seem sensible to put all the sector’s hopes in international student revenues when the marketplace is so volatile and global geopolitics remain so unpredictable.

A rebalancing towards greater public funding is what vice-chancellors would like to see, but the parlous state of public finances – and the huge political cost of tax increases – was in plain view at the budget.

Finding a solution that works for the sector, students and ministers will not be easy. But, at least, we now have a government that appears prepared to make a go of it.

chris.havergal@timeshighereducation.com