How the Cable/Willetts market in higher education ended up inflating fees

Left Foot Forward's Daniel Elton reports on how the coalition's higher education market ended up inflating prices and introduced pressures to increase government debt.

Remember all that lovely spin about how higher education tuition fees of more than £6,000 a year would be rare?

“Mr Willetts gave warning that universities should only charge maximum fees only in ‘exceptional circumstances’.” – The Daily Telegraph, February 21st 2011

“People keep citing £9,000. You know, £9,000 should be the exception not the rule. If you want to go through the £6,000 barrier you are going to have to jump through a lot of hoops.” – The Independent, December 5th 2010

“Simon Hughes (Bermondsey and Old Southwark) (LD): ‘One of the worries out there is that all universities might end up being allowed to charge £9,000. What assurance – what rules, what guarantees-can my Right Hon. Friend give that “exceptional” will mean “exceptional”, and that £6,000 will be the limit for most universities in the country?’

“Vince Cable: ‘That is a highly pertinent question in the light of the experience of the last government, who had a two-tier system. There was a migration of all universities to the top of the range. They operated, in effect, like a cartel, and that must be stopped.'” – Hansard, December 9th 2011

Well, it’s all turned out rather differently.


As the BBC reported this morning:

More than a third of England’s universities have had their plans to charge £9,000 for every course officially approved. Some 58% will be allowed to charge £9,000 for at least some courses in 2012, said the fees watchdog the Office for Fair Access.

One major reason why is that universities fear students will price as shorthand for quality, so resulting in universities actually competing to raise prices. As Left Foot Forward reported recently, the Vice Chancellor of De Montford University, Professor Dominic Shellard, told his student newspaper that DMU will charge £9,000 next year because:

“…whether we like it or not there’s a correlation between what you charge and people’s perception of quality. We’re quite ambitious as an institution, we want to go well beyond this notion that we’re a post-92 institution. It was a reflection of our ambition.”

We are fast heading towards a two-tier higher education sector where potential employers will ask applicants “did you go to a £9K university?”; strangely, senior Liberal Democrats said they changed thier minds on tuition fees due to the need to reduce the deficit.

Yet, with government paying fees up front and institutions competing to drive prices upwards, we have a recipe for increasing government debt, at least in the short term.

20 Responses to “How the Cable/Willetts market in higher education ended up inflating fees”

  1. mrjelfs

    How the Cable/Willetts market in higher education ended up inflating fees: //bit.ly/pko3dY – @DanielElton reports

  2. Michael Jeive

    How the Cable/Willetts market in higher education ended up inflating fees //t.co/UpadpIN via @leftfootfwd

  3. Sue

    How the Cable/Willetts market in higher education ended up inflating fees: //bit.ly/pko3dY – @DanielElton reports

  4. Robert

    Once Blair opened the flood gates we all knew how long it would take for the prices to go up. I suspect in another ten years the poor will go to college the rich to University and the rich immigrants will of course have the pick.

    Blair, Cable, Grove, Miliband, take your pick they are all out of the same basket.

  5. Leon Wolfson

    Another ten years? The fees were already very high, they’re now extortionate.

    Even more tuition fees, on top of the already-falling percentage of university students we have, is going to necessitate a lot of revision in university policy if we’re not to simply hand EU-trained students (British-born or not, given how much cheaper doing degrees abroad is, in English) the good jobs here.

  6. Will Straw

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  7. Ben Crosland

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  8. Martin Fivehats

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  9. Ben Ellis

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  10. Euphame McDonald

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  11. Mr. Sensible

    Couldn’t agree more Daniel; the Coalition’s record on higher education is one of broken promice after broken promice.

    And as you correctly point out, as a result of this, the taxpayer, as well as the student is footing the bill, leaving the government scrabbling around for ways to fund it.

  12. Catherine McDonald

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  13. Sam McBratney

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  14. Harry Barham

    Simon Hughes said in Dec that £6k shld be limit for most universities yet today we learned fees will average £8,393 //bit.ly/nG9mqN

  15. cim

    One major reason why is that universities fear students will price as shorthand for quality

    And, well, they’ll be at least somewhat right. The more money the government pays for the course, the better the course can be.

    If it was the student’s own money then there’d be a cost-benefit question to consider, but of course it’s not – the loan has such generous repayment and writeoff terms that it basically makes no financial difference to any student what the exact fees level is/was.

    So the students have no incentive not to pay the high fees, the universities have no incentive not to charge the high fees, and the government has no way to stop them doing so.

    I’m actually really quite surprised that there are so many universities not charging 9k for all courses.

    Mr Sensible. as a result of this, the taxpayer, as well as the student is footing the bill, leaving the government scrabbling around for ways to fund it

    Since students pay tax anyway, surely all HE is generally going to be taxpayer funded one way or another. The debate is about which specific taxpayers should pay for it.

  16. Leon Wolfson

    cim, yes, there is a real cost-benefit analysis.

    To get the standard quality of university education in this country, including the new transfer fees the government demands, ends up with well over £8,000.00 being the only reasonable price. Oh, there will be “cut-price” £6000.00 per year degrees from some collages, but they’ll be rightly seen as near-worthless.

    The cost-benefit analysis is “is this worth doing”, and in many, many cases where with no fees the answer would be “heck yes”, it’ll now be “no way”. Unless you’re rich, anyway.

    Yes, and the answer is “all of us pay”, lots more, when deacent jobs go abroad, and tax needs to be raised to cover the shortfall. Not to mention the brain drain this will cause.

    More, the scope of degrees taught here is already collapsing, contact hours falling and support services closed, because of the front-loaded costs being heaped on universities.

  17. fleshisgrass

    //t.co/erafoQX a higher ed market which drives up fees. Whaddaya know.

  18. cim

    Leon: Okay, but compare a 6k degree and a 9k degree (assume a three year course). Also assume a 4k student loan for living costs each year, which goes onto the same “debt”.

    At the end of your degree, you owe the government (SLC) either 30k or 39k.

    If your career average earnings for the next 30 years are less than about 36k a year, your repayments will be absolutely identical regardless of which degree you picked (so you might as well take the “expensive” one). If your career average earnings are more than 36k, then the more expensive degree will then and only then require higher repayments – but on the other hand you’ll be earning over 36k for much of your working life, and are definitely rich enough to pay a bit more towards your own education.

    The cost-benefit analysis is “is this worth doing”, and in many, many cases where with no fees the answer would be “heck yes”, it’ll now be “no way”. Unless you’re rich, anyway.

    That would be true if you had to pay the fees up front. Since you only make any repayments at all when earning a quite significant amount of money – and only lose a noticeable amount of money to repayments when earning well above the median wage – it’s more a bet from the government “We bet that if you have a degree you’ll get rich”. If you get rich then you pay back a small fraction of your riches. If you don’t, you pay nothing, or hardly anything. The 9k headline fees look scary, but since the government – via taxation – will end up paying for most of them anyway, it hardly matters.

    I confidently predict that after a drop in applicant numbers in 2012 (mostly caused by people not taking gap years to apply this year instead), student numbers will return to their existing slowly increasing trend in 2013, just as happened the last time fees tripled but repayment terms were made more generous to compensate.

    “all of us pay”, [when] tax needs to be raised to cover the shortfall.

    As someone who’s generally in favour of higher taxation to improve HE funding, that’s fine with me. It’s a really convoluted way to get more money into HE, and if they’d presented it differently and called it a graduate tax everyone would have been fine with it (except the Tory MPs whose votes were needed)

    More, the scope of degrees taught here is already collapsing, contact hours falling and support services closed, because of the front-loaded costs being heaped on universities.

    On this I completely agree with you. Cutting the funding from HEFCE a year before universities could charge higher fees to make up the difference from a different pot of government money is absolutely unsupportable.

  19. Adrian Cox

    I’m not trying to excuse the policy which I think is garbage simply because it won’t do what it says on the tin (that is, help deal with the deficit) as you quite rightly pointed out. Furthermore, few will be willing to make the ‘investment’ to study non-vocational degrees (humanities for eg), because they are unlikely to have a good return-on-investment unlike legal, business or medical degrees.

    Having said that, a lot of nonsense is being bandied around about this policy. My friend was aghast when I told her that her step daughter would not have to pay a penny up front and would probably (earning less than £25K per annum as I do) get £9K a year in grants and loans for maintenance. She, like most people, had no idea that these ‘fees’ are actually interest free loans with incredibly generous pay back terms. Since a graduate earns nearly twice that of a non graduate on average, and since only 4% of income needs to be paid back each year, these mega-fees are still a good investment for most degrees. Also, those complaining about Europeans getting it essentially for free (as long as they never return to the UK), should know that it goes both ways, we can also go to France if we want to and never pay a penny for our degree. Maybe time to start learning French?

  20. Coalition continues being wrong, wrong, wrong on its own tuition fees policy | Left Foot Forward

    […] their fees, the average now stands at “only” £8,393 – and 58% of universities are charging the absolute maximum, […]

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