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Friday, 1 November, 2002, 14:52 GMT
Higher fees: Political dynamite

If you think the government has been in hot water over A-levels, just wait and see the temperature soar when it goes ahead with the introduction of top-up tuition fees at elite universities.

The White Paper on higher education ... would have proposed removing the block on top-up fees

I have no doubt this is the direction the government is taking.

The White Paper on higher education, already finalised before the appointment of the new education secretary, would have proposed removing the block on top-up fees after the next election - it could not be done any earlier without breaking a manifesto promise.

I understand it is the prime minister himself, and his policy unit led by Andrew Adonis, who had decided to bite the bullet on top-up fees.

Hence Tony Blair's pointed refusal to rule them out when challenged to do so in the House of Commons this week.

Estelle's concern

The former Education Secretary, Estelle Morris, was not enthusiastic about top-up fees.

The prospect of having to defend an unpopular policy which she did not support personally was a factor, although not the main reason, behind her resignation.

Estelle Morris
Estelle Morris did not like top-up fees

The arrival of a new education secretary means, of course, we must wait a little longer for the White Paper.

Charles Clarke must have been shocked to realise he was due to launch this controversial policy within a few weeks of taking up his job.

As a former president of the National Union of Students he can hardly relish being the man who presides over the introduction of tuition fees of up to 10 times the current level.

He, like the condemned man, has asked for a little more time. The White Paper will not now be delivered until the New Year.

Delay upon delay

This is but the latest of many delays. The review was launched by Tony Blair at the Labour Party Conference in October 2001.

Charles Clarke
Charles Clarke is taking another look

Then it had a limited remit - focusing on student financial support - and was due to report within a few months.

The extent of the problem soon emerged. It is this. The government believes passionately in its target of getting 50% of young people into universities by 2010.

That is a massive expansion. Expansion costs money.

But the money has gone to schools and hospitals. Problems in the economy mean Gordon Brown cannot easily conjure up more in taxes.

So someone other than the taxpayer must meet the bill. The employers show no sign of stepping up to the plate.

That only leaves students (or their parents), either while they are at university or after they have graduated.

Social equity

But then the government hits another problem. Charge students more and you deter those from poorer backgrounds.

Ministers have considered several forms of graduate tax

These are the very people the government needs to attract to meet its targets and wants to attract on the grounds of social equity.

So the first wheeze was to charge graduates not students. After all, the figures show that a degree gives a huge boost to your lifetime earning powers.

Indeed, a report by the Organisation for Economic Co-operation and Development (OECD) this week showed that the return on the investment of getting a degree - including the costs of tuition fees and delaying the start of work - is well above the return you could get from a bank or building society.

Indeed in the UK the earnings differential of a graduate over a non-graduate is higher than anywhere else in the developed world.

So, over the past year, ministers have considered several forms of graduate tax. But they have rejected them all.

Graduate tax

One of the biggest problems is that the Treasury does not start to receive this money until after students have done their three or four-year courses and are earning a reasonable salary.

In short, a graduate tax won't deliver the money to meet expansion now.

Doubling the current tuition fee to around 2,000 or so might have been one answer. It would bring in more money, even though only around half of all students pay this means-tested contribution.

But, again, there is clearly a deterrent factor even though the poorest are exempt.

Also there is an argument that a flat-rate fee is hardly fair when comparing, for example, the benefits of an Oxford degree with a degree from one of the newer universities, or the economic gains from a degree in medicine or law compared to a degree in divinity.


For more than 12 months ministers have scratched their heads. It's an unenviable task.

Top-up fees are seen as the "least worst" option

Apparently more than 70 different models of reform have been tried then rejected.

Which is why top-up fees have come to the fore. They are no-one's favourite, but they are now seen by Downing Street, and by many but not all of the leading universities, as the "least worst" option.

The leading universities have virtually abandoned hope of getting the sort of public funding they think is required to compete internationally.

They know that winning research grants, attracting the best academics, and recruiting lucrative overseas students is now an internationally competitive game.

Oxford, Cambridge, Imperial, UCL and others fear they are falling too far behind their more affluent competitors across the Atlantic.

Many of the top universities seem finally ready to charge top-up fees if the government will let them.

New types of university

In the meantime, what started out as an attempt to solve the issue of student grants and fees has broadened into a wholesale review of the university system.

Older cynics might see this as a return to the old polytechnic/university divide

We are likely to see a new division between traditional research-based universities and new "teaching universities".

There will be changes in the current funding mechanisms to allow universities to play to, and be rewarded for, their teaching rather than their research work.

Older cynics might see this as a return to the old polytechnic/university divide which was scrapped by the Conservative government over a decade ago.

The government would also like to see some universities focusing primarily on vocational subjects - journalism and business studies rather than the traditional "vocational" subjects such as law and medicine - which, again, seems a little like re-inventing the polytechnics.

And there will be more emphasis on a "market" in higher education. This means more mergers, and take-overs, as the elite institutions get bigger and stronger, and also the strong possibility of some of the weaker universities falling by the wayside.

In this new, market-oriented climate, the government would be ready to let an unpopular and uneconomic university close or be taken over by another.

But even these controversial issues will be overshadowed by the issue of top-up fees.

Middle-class fears

The middle classes are already getting alarmed. They can sense it will be those families earning over 30,000 or so who will bear the brunt of extra fees.

The middle classes will shriek as they are squeezed

The current 3,300 contribution towards the costs of a degree could become 30,000.

Add to that living costs, and the total cost of going to university could be around 40,000 - 50,000, maybe more for longer courses.

In the long run, graduates who go into high-earning jobs will still turn that into a worthwhile investment. But in the short-term it is a big financial burden for many middle-class families.

The government can point to the USA, where it is standard to take out bank loans and run up big debts.

Americans expect to do that. They are used to students working their way through college and graduates starting work with big loans to repay.

But getting to where they are now will take a huge cultural shift in Britain.

The middle classes will shriek as they are squeezed. And when the middle classes protest, governments quake.

No wonder Charles Clarke wanted a bit more time. It is already too hot in the education kitchen.

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Analysis: Mike Baker

Different approaches


See also:

31 Oct 02 | Education
30 Oct 02 | Education
29 Oct 02 | Education
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