Universities prepare for a fall in student numbers

More than half of English universities expect fewer students as a result of the fees rise.

Will tuition fees of £9,000 deter pupils from applying to university? That's one of the questions that has been occupying David Willetts in recent months. Today, we're a little closer to getting an answer. A survey of institutions by the Higher Education Funding Council [HEFC] has found that more than half of English universities expect to be teaching fewer UK and EU undergraduates when the fee rise kicks in next year. On average, universities expect a 1.9 per cent fall in numbers, but one institution is forecasting a 20 per cent drop while five others believe numbers will be cut by a tenth. Just under a quarter - 24 per cent - expect an increase and a fifth anticipate no change.

It's something of a headache for Willetts, who, while eschewing the target culture favoured by New Labour, has made it clear that he both hopes and expects student numbers to rise. As Steve Smith, the recently departed head of Universities UK, told me when I interviewed him: "Willetts wants more people at university, not everyone in the Conservative Party agrees with that." The key question, of course, is whether this is likely to be a temporary or a permanent reduction. When Labour tripled fees to £3,000, student numbers fell by 15,000 (3.7 per cent) in the first year (2006) but they later more than recovered.

Then there's the question of what it all means for universities' balance sheets. Under the Willetts model, money will follow the student, meaning that some universities dramatically expand, while others shrink. The HEFC warns that the sector continues to operate on "very fine margins" which make insitutions vulnerable to "small changes". It adds that universities will be in a "financially sustainable position" in the medium term, but some "will need to generate better financial results in the longer term". All of which raises the question of whether some institutions could even go bankrupt. When I asked Smith about this, he replied that ministers would never allow this to happen "because they'll work out what it would mean for the local economy." In some communities, he pointed out, the university is one of the largest, if not the largest, net contributors to the economy. Like the banks, the universities, it appears, are too big to fail.

But ultimately if the decision to charge the highest public university fees in the worldleads to fewer students, particularly those from poorer backgrounds, then Willetts's grand experiment will be judged a failure.

George Eaton is political editor of the New Statesman.

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