Wednesday, 20 June 2012

English university funding: yet more cracks emerge

Again and again this blog has returned to the dog's dinner that Ministers have made of English student funding. Underfunded, I've called it. Likely to land taxpayers with a great big bill. Leaky. Ill-thought-out.

Now everyone else is saying the same thing. Not that I can claim all that much wisdom, for the flaws were all-too-evident when the House of Commons passed a higher fees cap without even seeing a Higher Education Bill (which we'll now probably never see). But there you are: it's always nice to have friends.

A Barclays Corporate event on the sector last week overwhelmingly decided that the present financial arrangements are not sustainable.

Taken at a time when universities face an ever-more confused system, with more and more colleges renaming or preparing to open with that 'university' title, and when they're facing ever-rising cost pressures such as the push for open-access publishing, it's no wonder. Universities are spending money on trying to tempt Scots students away from their taxpayer-funded system. They're facing growing competition from other EU countries' institutions teaching in English to undercut their charges. Complaints are rising from an ever-more consumerist generation of consumers.

It gets worse, by the way. The next 'reforms' to the Research Excellence Framework, and the next Comprehensive Spending Review looking ahead to 2017, are likely to see government spending on Higher Education fall further even than its projected 2015 lows (above), placing even more pressure on student tuition fees and the terms on which the Government pays them 'up front'. It's no wonder that an independent commission, chaired by Will Hutton, has decided to look again at the whole system.

What's most worrying about that is the status of the debt. While this remains a quasi-taxation system, owned by the government and available at quite low interest rates, it's just about sustainable for most young people to aspire to university. They'll have to pay less per month than they often do under the existing arrangments, as Liberal Democrat Ministers never tire of pointing out.

But if the system breaks down, and the loan book is sold meaning that higher interest rates and shorter terms have to be imposed, then the status of the debt might change. If it's ever going to be treated like normal debt, £25,000 to £40,000 of debt will weigh very heavily indeed on anyone under 18 now who aspires to, well, I don't know, ever buy a house, a car or get a personal loan. At the moment, the debt will sit rather lightly. One day it might not. That's the terrifying prospect that these risky measures hold out.

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