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Cable attempts to rescue the coalition’s fees plan

Business Secretary threatens universities charging £9,000 with fewer student places.

It isn't just the coalition's NHS reforms that are in chaos. As I noted last week, the unexpectedly high number of universities planning to charge the maximum £9,000 a year (a possibility foreseen by almost everyone except ministers) means that the government's higher education reforms face a £1bn black hole. Ministers had budgeted for an average fee of just £7,500 but will now have to pay out far more in tuition fee loans. Of the 32 institutions we've heard from, 23 intend to charge full whack, including Oxford (1) and Liverpool John Moores (109), and the average fee currently stands at £8,855.

In part, this is to compensate for the planned 80 per cent cut to the teaching budget. The vice-chancellor of John Moores, for instance, claims that his university would lose £26m if it charged a flat rate of £6,000. But it's also because no institution wants to look like a cheap option. Instead, like Stella Artois, they want to be reassuringly expensive. In response, ministers can make even greater cuts to the teaching budget, or cut roughly 38,000 student places, or reduce the cap on fees.

We'll get some idea of what they're planning when Vince Cable, the man with ministerial responsibility for the plans, addresses a higher education funding conference in Birmingham. Previews of his speech suggest that Cable will warn that universities could find themselves in trouble if students can't see value for money. He will add, with a hint of menace, that unfilled places will be withdrawn and that institutions "should not assume they will easily get them back".

In other words, the government's best hope is that students will be deterred by excessive fees. Should this prove not to be the case, the likelihood is that ministers will withdraw the places themselves.

In the meantime, we're still waiting for the coalition's white paper on higher education, which was postponed after ministers realised they'd got their sums wrong. As in the case of Andrew Lansley's crumbling "masterplan", the perils of hasty reform lie exposed.