Why tuition fees could bankrupt universities

A new report warns that more institutions will be at a "high risk of failing".

One of the strongest arguments against the coalition's higher education reforms is that they will put more universities at risk of bankruptcy. The decision to cut the teaching budget by 80 per cent - including the entire budget for arts and humanities - and introduce a system in which money follows the student, means that universities will be left to sink or swim according to the whims of the market.

This point was well made in a recent letter by 681 Oxbridge academics (and you thought 365 economists was a lot) to the Independent. They wrote: "[W]e fear that the proposed new model by which "the money follows the student" will produce random effects in the HE sector, depriving some courses of income streams, and decimating the funding for teaching in some institutions, without any coherent and publicly announced policy in regard to which of these institutions and courses the Government believes should be left to fail. As has been publicly announced, this is to be left to the market to decide."

Today's report by the National Audit Office rightly argues that students need to be told more about those universities at risk. Last year, seven universities were placed on an "at high risk" register but this could increase to 23 by the end of the first year of the new fees being introduced. A previous report by the University College Union put 49 of England's 130 higher education institutions at 'very high', 'high', or 'high-medium' risk of serious impact from cuts to the teaching budget.

The Higher Education Funding Council currently waits for three years before it publishes a list of universities at high risk of financial failure and, even then, the list is not made publicly available. However, those "at risk" are known to include Thames Valley University and London Met. The NAO rightly argues that this arrangement should be reviewed. It notes:

As a greater proportion of funding begins to follow the student, the funding council should consider whether the current arrangements strike the right balance between protecting institutions and their students, on the one hand, and enabling prospective students to take more informed decisions on where to study, on the other.

With fees due to rise from £3,290 to a minimum of £6,000, the pressure for transparency will grow - and rightly so.

George Eaton is political editor of the New Statesman.

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Tom Watson rouses Labour's conference as he comes out fighting

The party's deputy leader exhilarated delegates with his paean to the Blair and Brown years. 

Tom Watson is down but not out. After Jeremy Corbyn's second landslide victory, and weeks of threats against his position, Labour's deputy leader could have played it safe. Instead, he came out fighting. 

With Corbyn seated directly behind him, he declared: "I don't know why we've been focusing on what was wrong with the Blair and Brown governments for the last six years. But trashing our record is not the way to enhance our brand. We won't win elections like that! And we need to win elections!" As Watson won a standing ovation from the hall and the platform, the Labour leader remained motionless. When a heckler interjected, Watson riposted: "Jeremy, I don't think she got the unity memo." Labour delegates, many of whom hail from the pre-Corbyn era, lapped it up.

Though he warned against another challenge to the leader ("we can't afford to keep doing this"), he offered a starkly different account of the party's past and its future. He reaffirmed Labour's commitment to Nato ("a socialist construct"), with Corbyn left isolated as the platform applauded. The only reference to the leader came when Watson recalled his recent PMQs victory over grammar schools. There were dissenting voices (Watson was heckled as he praised Sadiq Khan for winning an election: "Just like Jeremy Corbyn!"). But one would never have guessed that this was the party which had just re-elected Corbyn. 

There was much more to Watson's speech than this: a fine comic riff on "Saturday's result" (Ed Balls on Strictly), a spirited attack on Theresa May's "ducking and diving; humming and hahing" and a cerebral account of the automation revolution. But it was his paean to Labour history that roused the conference as no other speaker has. 

The party's deputy channelled the spirit of both Hugh Gaitskell ("fight, and fight, and fight again to save the party we love") and his mentor Gordon Brown (emulating his trademark rollcall of New Labour achivements). With his voice cracking, Watson recalled when "from the sunny uplands of increasing prosperity social democratic government started to feel normal to the people of Britain". For Labour, a party that has never been further from power in recent decades, that truly was another age. But for a brief moment, Watson's tubthumper allowed Corbyn's vanquished opponents to relive it. 

George Eaton is political editor of the New Statesman.