The £1bn black hole in the coalition’s tuition fees plan

Why the government will have to make even larger cuts to higher education.

Perhaps the biggest myth spread by Nick Clegg is that the size of the deficit meant the coalition had no choice but to triple tuition fees. For the record, he said:

At the time I really thought we could do it [not increase tuition fees]. I just didn't know, of course, before we came into government, quite what the state of the finances were [sic].

In reality, for the reminder of this parliament at least, 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 2015 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.

It's for this reason that ministers are so troubled by the number of universities planning to charge the maximum £9,000 a year. Higher fees mean higher loans. Of the 16 universities we've heard from, 13 intend to charge full whack, including Oxford, Cambridge, Imperial, University College London, Warwick, Durham, Exter, Essex, Aston, Birmingham and Lancaster. A new survey of 40 institutions by the Times (£) suggests that the average fee will be around £8,700 a year, significantly more than the £7,500 budgeted for by the coalition.

As a result, the government's reforms face a £1bn black hole. New figures from the House of Commons Library show that if the average fee is £8,600, the state will have to spend £960m more over the next four years. That could mean even bigger cuts to the teaching budget (currently facing an 80 per cent cut) and/or fewer university places.

At least 38,000 places could have to be axed to bring the costs back in line with Treasury forecasts. As I've reported before, the coalition's white paper on higher education has been delayed while ministers thrash out a solution.

There's a high chance that the funding gap will be even larger than I've suggested. The Treasury is already resigned to losing £1bn of the £3bn it pays out in student loans due to graduates moving abroad or earning wages under the new repayment threshold of £21,000 a year. But should graduate earnings increase by 3.75 per cent a year instead of 4.47 per cent, the government's assumed savings will be wiped out completely. The Breakneck Coalition has been taught another lesson in the perils of hasty reform.

George Eaton is political editor of the New Statesman.

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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