Bravehearts fear the fees

Top-up fees will give English universities a new income stream - and that could lead to Scottish institutions falling behind.

Scottish universities are worried about English top-up fees. They are more worried now than they were a month ago because the English Higher Education Bill is passing all its parliamentary stages. The opponents were beaten at committee stage and were also defeated in the House of Commons in March. So, the expectation must be that top-up fees will be approved by the House of Lords and become a reality.

Scottish universities are worried about English top-up fees. They are more worried now than they were a month ago because the English Higher Education Bill is passing all its parliamentary stages. The opponents were beaten at committee stage and were also defeated in the House of Commons in March. So, the expectation must be that top-up fees will be approved by the House of Lords and become a reality.

Many in Scotland fear that it will leave them much worse off than their English counterparts. "From 2006, every English university charging full fees will be £10,000, per lecturer, better off," says Professor Bernard King, the principal of Abertay, Dundee, one of Scotland's post-1992 universities. "By 2007 the figure will be £20,000 and by 2008, £30,000, as the system kicks in."

This is only the start, according to Professor Anthony Cohen, principal of Queen Margaret University College, Edinburgh. "There is a real concern not just that Scotland will be left underfunded but that the cap of £3,000 will prove unsustainable. If the top six universities move to charging £10,000 fees, where does that leave everyone else?"

When the English Bill was published there was a flurry of apprehension across Scotland's campuses. The Scottish Executive responded with more scrutiny of the sector - the Third Phase Review - a fact-finding exercise. Parliament's cross-party Enterprise Committee launched an investigation, and everyone expected reassurance.

The Liberal Democrat MSP Jim Wallace, deputy first minister in Scotland's Labour-Liberal Democrat governing coalition, includes higher education in his enterprise brief. His party plays a strong education card. His sympathy was expected, but in November 2003 he told the universities bluntly to come up with their own solutions rather demand more money.

Meanwhile, the Enterprise Committee produced an unequivocal conclusion: "Top-up fees will result in an additional income stream to higher education in England," it said. "If higher education in Scotland is to maintain its competitive advantage, it will be essential to lever additional funds into the sector."

Universities Scotland, which represents all Scottish universities, was alarmed, however. It created a special website - www.investhigher.org - arguing for the state to invest in higher education.

Expert witnesses had alerted the committee to another hazard. It had been thought originally that Scotland would automatically gain from the extra funding England acquired from top-up fees, through the Barnett Formula (named after the former Treasury minister, Joel Barnett). This decides how much the Exchequer in London gives Scotland. If the grant to English universities is increased, Barnett ensures a proportionate increase in the Scottish budget. But top-up fees - being paid by students - will not count as English public expenditure, so the English universities' gain will bring no consequential Barnett benefit to Scotland.

When, despite Scottish hopes, the Higher Education Bill did not founder on third reading, the Scots found themselves with their backs to the wall. Not for the first time, other Scots helped to put them there. The 65 MPs from north of the Border who voted, backed it by a majority of 29 with the strong support of Scottish Labour MPs. The Government's overall majority was 28. If the Scottish MPs had not voted that way, the Bill would have fallen. So the multi-million pound benefit for English universities came generously wrapped in tartan ribbon.

Back in Edinburgh, the apparently obvious option of introducing matching top-up fees is not an option at all. Welsh university bosses, by contrast, have called for top-up fees to enable them to compete with England. And Northern Ireland is consulting on the issue. But opposition is deep-rooted across Scottish society.

One of the first acts of the new Scottish parliament was to abolish up-front tuition fees and introduce a scheme whereby graduates of Scottish universities would pay a contribution after graduation. None of the six parties would back top-up fees, nor would any university call for them.

Professor Tim O'Shea, the Principal of Edinburgh University, an institution with the strength and reputation to exploit a top-up regime, is a firm opponent. He is not alone. "A good feature of higher education policy here in Scotland is that it is consensual and it is good that it stays that way," he says. "The unnecessary turmoil in England has been damaging."

The impact of this self-denying ordinance could be costly - and come earlier than expected. O'Shea believes that some English institutions are poised to spend their new-found wealth before it arrives. Others in Scotland are reassessing the benefits that top-up fees might bring. "Perhaps some of my English colleagues are being naive in expecting a good financial settlement after the top-up fees," says one principal. "Politicians might say 'they can raise their own fees now - they won't need so much from the Treasury'."

Rami Okashi, president of NUS Scotland agrees: "We don't believe it is going to be new money at all." The same thing happened in 1998 with the introduction of tuition fees, he points out. Apparent gains were quickly taken away by the Government.

At the same time, university leaders see that there are gains to be had from the fees debate. "The top-up issue has focused attention on university funding," says Dr Tony Axon, research officer for the Association of University Teachers (AUT) in Scotland. "If top-up fees hadn't happened you wouldn't be writing about funding!"

The Scottish universities are responding with conventional funding bids and some radical thinking. Universities Scotland is pitching a £350m bid ahead of the Scottish Executive's spending review for 2006-2007. It includes a £200m one-off payment for upgrading campus infrastructure to restore a competitive edge blunted by years of cost cutting.

"For our day-to-day business we need an additional £150m of recurrent investment," says Robin McAlpine, spokesperson for Universities Scotland. "And a third of that is essential to upgrade salary scales to attract and retain top-quality staff." Anything less than a £100m increase in recurring funding would, says McAlpine, be a disaster. The Universities Scotland demand - for a hike of more than 15 per cent on the current £800m spent higher education - should, he says, be seen in the context of Scotland's £30bn budget and higher education's declining share, down from 3.6 per cent in 1999 to 3.1 per cent in 2004.

Meanwhile, the top-up issue has sharpened thinking about alternative funding sources. A Scottish graduate tax is a non-starter (what better way to drive talented graduates out of the country?), while a UK-wide tax would challenge the Treasury's congenital distaste for ring-fencing revenue. Dr Ian Johnston, the principal of Glasgow Caledonian University, believes that the £2,000 income-contingent contribution which Scottish graduates pay after their salary passes the £15,000 threshold could be doubled. Although repayments are dedicated to student support, they don't meet the total bill. Government money makes up the balance, but this could be freed for other university spending if graduate payments into the student support pot increased.

Commercial spin-outs, the oft-cited alternative, have been producing results for a long time. One-third of UK university income from spin-outs is generated in Scotland, says O'Shea.

At Abertay, Professor King wants the higher education sector to generate wealth for itself and the economy. He cites his own institution's masters course in computer games technology (a world first) as typifying Scotland's need to create a "a graduate labour force in a working economy".

Welcoming the Scottish consensus for maintaining research across all universities - teaching-only institutions, he says, would fail the EU's Bologna definition of a university - he calls for an end to dual support for research and for Scotland to pull out of the "ossifying" research assessment exercise. Never one to shirk a big idea, King suggests that Scottish universities capitalise on their property portfolios and intellectual assets and raise a bond on the financial market to give themselves a multi-million pound boost. Now there's a bold response to top-up fees.

How The Market Is Changing Either Side Of The Border

Top-up fees present a two-fold problem for Scottish students, according to Rami Okasha, the President of NUS Scotland. At the moment, 3,000 Scottish-based students study in England. Some are simply broadening their horizons: for others the move is necessary to pursue a particular course. In future they will face the hurdle of top-up fees. Stay at home however, and they could be squeezed by the rush of students from England - and the EU - who are keen to avoid the fees. English applications for this autumn's Scottish entry have risen by 12 per cent in three months says Okasha, while there has been an 11 per cent drop in applications in the opposite direction. Although the Scottish honours course lasts four years, many applicants with A-levels can cut it back by securing second year entry.

Being an Englishman, Dr Ian Johnston, the principal at Glasgow Caledonian, is able to say that he fears too many students coming north. "The international mix is part of the University experience but, if there are too many students coming in from England, the problem is not for the university but the economy," he explains. "There is a direct correlation between the home-based student population and the percentage staying after graduation." The goal of creating a knowledge economy in Scotland will not be helped if too many of its students are seeking a campus of convenience before taking their skills elsewhere.

education@independent.co.uk