Here we go again ...

As expected, Labour have now announced their policy of reducing home/EU undergraduate tuition fees in England to £6k per year, from the current £9k. (The policy only affects England, as higher education is a devolved responsibility).

There’s already much argument about the merits of the plan. To summarise, in the Pro camp, you’ll find the observation that the system is broken and something needs to be done, or public debt will spiral out of control; that the perception of debt is a fear as much as the actual debt; and that an increase in the maintenance grant is a good thing. On the Anti side you’ll see the observation that this puts long term university funding at risk; that it benefits only better off graduates; and that there isn’t a long-term problem that needs fixing.

November 2010, 30 Millbank ...

Here’s my take on this.

Firstly, the system is broken. Although forecasts about the RAB charge and the amount of debt that will not be repaid are only forecasts, it is unarguable that the average level of tuition fee actually charged is substantially greater than the £7,500 on which the policy was based. £9,000 was meant to be charged only in exceptional circumstances; it has instead become the universal norm. In these circumstances, it’s hard to believe that there’s no effect on public finances. And as the coalition’s plans for reducing the public deficit have not borne fruit (despite what George Gideon Oliver Osborne says) this must be a problem for the future.

Secondly, it is correct that the money benefit will go to higher earning graduates. This is straightforward mathematics. What is also true is that the perception of debt will reduce, and that will, I think, remove some disincentive to potential students and their families. How much? We won’t ever know, so that’s a matter of faith.

Will it reduce university funding? It all depends on the nature of politics and public funding, and the effectiveness of future HE ministers versus chancellors. So that’ll likely be a ‘yes’, then, but at some unknown and unspecified date. A government response will be that it serves universities right for being greedy in fee setting in the first place, but as the whole £9k fees policy was a dog’s breakfast from the outset this is just name calling.

So let’s speculate that Labour get into government with a working majority. How would this be implemented?

The framework within which fees are charged is that laid out in the 2004 Higher Education Act – there’s a basic amount and a higher amount. The basic fee level was set – after the 2010 discussions – at £6,000 per year; the higher amount is £9,000 per year. These are in the precisely named Higher Education (Basic Amount) (England) Regulations 2010 and the Higher Education (Higher Amount) (England) Regulations 2010.

The way it works is that any approved provider can charge fees up to the basic amount (£6,000); to charge at the higher amount (£9,000) you need to have an access agreement approved by OFFA.

So far, so good. The rub is that the basic fee amount is what private providers (eg BPP University, University of Law etc) can charge; the higher amount applies to HEFCE funded universities. On the World at One this lunchtime Chuka Umunna – Labour’s BIS frontman – said that the intention was to continue to require universities to pay bursaries and support access, implying that the basic/higher levels, and the requirement to submit an Access Agreement to OFFA, will continue to apply.

This suggests that the Basic Amount will be reduced to £3k, and the Higher Amount to £6k. If this is the case, then private providers won’t, without further legislation or specific regulation, be able to charge the £6k they are at present.

If this was part of Labour’s plan I’d have expected it to be talked about: you can make good political capital about “clamping down on dodgy profiteering colleges”, even if this is probably unfair when applied to the larger and more reputable ones.

An unanticipated consequence, perhaps?