Swings and roundabouts

The universities had hoped the Dearing report would bring them a nice big injection of new cash. But now it appears that David Blunkett's reforms will just be shuffling money from one pot to another

Education Secretary David Blunkett seems to have annoyed rather a lot of people with his response to the Dearing report. Better-off parents are indignant that they will have to pay pounds 1,000 a year towards tuition fees; the National Union of Students is planning big national and regional demonstrations to coincide with the new parliament in October; Labour and Lib Dem MPs are jumping up and down about access; and now higher education experts are saying it could mean little, if any, new money for universities.

"There's not a single brass farthing in it for higher education," says Iain Crawford, visiting research associate at the London School of Economics' centre for educational research and one of a group of experts who met vice chancellors last week to analyse the government's position. "It'll alienate the middle classes and will not bring in one penny to higher education for seven to eight years."

The vice chancellors' committee is not using such strong language, not yet at any rate, but Professor Sir John Kingman, vice chancellor of Bristol University, accepts the logic of the Crawford analysis. "It's appalling for the universities," he says. Professor John Bull, vice chancellor of Plymouth University and treasurer of the Committee of Vice Chancellors and Principals who was also at the meeting, says: "The pounds 1.7 billion which the government says will be brought into the system by the year 2017 is not much use if over the next three years a number of institutions go bankrupt."

It would indeed be ironic if the net result of all the time and energy - the millions of words expended by Sir Ron in his big report, the research he commissioned and his numerous subsidiary publications - should result in no new money for a sector which claims to be in crisis.

After all, the whole raison d'etre for Dearing was financial. The committee was established because vice chancellors were planning to charge students a registration fee to meet the short-term funding crisis. Sir Ron, it was thought, would come up with a palatable solution. The trouble is that Sir Ron's logical proposals have been junked by a government which ran scared very quickly.

Professor Alan Smithers of Brunel University comments: "What you need is a funding structure that is stable and based on sound analysis. If you make compromises you will ultimately be caught out." Doug Trainer, president of the National Union of Students, says: "The fact that the government's policy has been sketched on the back of a fag packet doesn't inspire confidence."

The big compromise made by Blunkett was over student funding. Sir Ron had proposed that the means-tested grant for board and lodging should stay to keep poorer students in higher education and that all students should pay tuition fees of pounds 1,000 a year. Students could finance the fees through a new government loans scheme, under which repayments would depend on income. His argument was that universities badly needed the money and that higher education provides a big private benefit to individuals, netting them an extra 11 to 14 per cent a year in salary. (Research is cited to show that.) It is well known too that the way the United Kingdom has organised student funding has provided a huge subsidy to the better-off, since graduates are overwhelmingly middle or upper middle class.

Following pressure from the National Union of Students, however, Blunkett decided to introduce means-testing for the payment of the pounds 1,000 tuition fee, so that families earning less than pounds 16,000 a year would be exempt. He also abolished maintenance grants, replacing them with bigger maintenance loans, the size of which will be based on parental income.

Announcing his compromise, the Education Secretary said that the overall cash contribution from parents would be no bigger than at present. That point persuades Iain Crawford that there will be no new money coming into the system. Funds will simply be shuffled from one pot to another; from, for example, the amount that parents currently give to their offspring as their contribution for board and lodging to the pounds 1,000 tuition bill.

Moreover, the amount borrowed in student loans is expected to rise. More students will take out bigger loans to pay for their board and lodging, but that will not translate into more cash for the universities. In fact, it could mean less money in the short-term because so much public money will be lent to students for their living costs.

What worries Sir John Kingman is that the new pounds 1,000 tuition fee will simply be removed from the block allocation which each university receives from the higher education funding council - and informal discussions between the vice chancellors' committee and civil servants suggest that is what will happen. That would leave higher education in its present forlorn position and mean that the extra money for tuition was simply reducing the Exchequer's commitment to higher education. "In that sense it would be a tax," says Sir John. "I very much hope we can persuade ministers to let us have the money on top of our allocations because we desperately need it."

David Triesman, general secretary of the Association of University Teachers, is equally concerned. "If money is raised in higher education, it must be spent in higher education," he says. "If it isn't, the political row will be monumental, much bigger than that caused by the NUS."

In his report Sir Ron said that universities needed pounds 350 million in 1998- 99 and pounds 565 million the following year to get back on their feet, spruce up their buildings and equipment and resume expansion. The government has given no indication of where that money will come from. If it refuses to treat the pounds 1,000 fee as extra money, it can expect an outcry. Bristol University is one of those which put a warning in its prospectus that it might have to charge top-up fees to students. It will be deciding whether to go ahead in October.

Higher education is operating in the dark. Blunkett's precipitate action in leaking his hastily compiled response to Dearing before the report actually came out has left the sector in a state of uncertainty in which fears abound. Very few details of the government's ideas have been committed to paper. No one knows what the repayment mechanism for the new, bigger maintenance loan will be, for example.

Professor Dave Robertson, of Liverpool John Moores University, wonders what will happen if a parent declines to pay the pounds 1,000 for tuition. "Given that parents often elect not to pay their contribution to maintenance that is not unlikely to happen," he says. "Will students then not be eligible for university?"

But Professor Robertson's main concern is that the pounds 1,000 fee would work against students on HND and other sub-degree qualifications. Consumers might see that sum as a good bargain for a degree from Oxbridge or Bristol but not for an HND. It could kill off the expansion in further education, he thinks, and thereby contradict the government's strategy of getting more students to enter higher education through further education.

The proposal for students to pay a flat charge of 25 per cent of the average cost of a university course (or pounds 1,000) is based on the Australian Higher Education Contribution Scheme which makes graduates repay the money in relation to their earnings. The evidence is that it has not deterred students from higher education. Most experts, although they may be sad that the days of free higher education are ending, praise Sir Ron Dearing and David Blunkett for conceding the principle that students should pay.

Bruce Chapman, professor of economics and director of the Centre for Economic Policy Research at the Australian National University, says: "The Dearing Committee should be congratulated for moving the system towards one in which those directly advantaged by higher education pay some part of the public sector costs, but in a way in which the access of students will not be affected because repayment is income contingent. This is the best general approach."

But he is dismayed that Blunkett has decided to exclude poor families from paying the tuition fee. The idea that students from poor families be excused the charge is not easy to defend on economic or social grounds, he says. "All the evidence in Australia points strongly to there being no effects from HECS on the access of the disadvantaged to the system, and many such students go on to be very high income graduates. Moreover, income contingent schemes are designed to break the nexus between a student's family background and enrolment, and this feature of potential UK policy entrenches the link unnecessarily."

Other commentators in Britain are making the same point. But for the Education Secretary the problem is more political than logical. By throwing a bone to the NUS in the shape of means-tested tuition, he hoped to innoculate the government against a political storm. That has turned out not to be the case. The NUS likes the concession for poorer students, but objects to any payment for higher education at all. It is now organising a ballot for regional and national demonstrations this autumn. Labour MPs are likely to be strongly lobbied to vote against Blunkett's compromise.

"There is considerable danger of the whole thing collapsing in ruins," says Sir John Kingman. "And you can be sure the universities won't be benefiting at all"n