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The coalition’s fees plan is in trouble

Why ministers are desperate to stop universities charging students £9,000 a year.

The "breakneck coalition" has hit another bump in the road. The universities minister, David Willetts, has announced that the government's white paper on higher education, which we were expecting next month, will be delayed in order to "test proposals more thoroughly among the sector, student and other experts".

Willetts is concerned that most institutions seem likely to follow Oxford, Cambridge and Imperial in charging the maximum £9,000 a year. He has threatened to make even larger cuts to public funding if average fees exceed £7,500.

But the government's reckless decision to cut 80 per cent of the teaching budget – including the entire teaching budget for arts and humanities – means that most universities need to charge at least £7,000 just to stand still, let alone offer an improved service to their "customers". Others are keen to charge full whack to avoid being seen as a "poorer option".

The reason why ministers are so troubled by this is that the more universities charge in fees, the more the government has to pay out in loans. The decision to triple fees was sold by Nick Clegg and others as a deficit reduction measure, but it was nothing of the sort. The truth is that, for the reminder of this parliament at least (and possibly after it), the reforms will cost the government more, not less.

The new fees won't come into effect until 2012, which means repayments won't kick in until 2016 for a three-year course. In the intervening period, the government will be forced to pay out huge amounts in maintenance loans and tuition fee loans. If higher education spending isn't to run out of control, the coalition will need to make even deeper cuts to the teaching budget.

Whatever solution ministers choose, Clegg's claim that "the state of the public finances" meant there was no option but to raise fees has been exposed as a flat-out lie.