The price of top-up fees

If the Government's plans for top-up fees prevail, all universities will be entering a new era. But, asks Lucy Hodges, will that mean some go to the wall?

Only a newspaper columnist like David Aaronovitch would have the gall to tell the Prime Minister to his face that if he couldn't get his top-up fees bill through Parliament then he couldn't govern. But that's what the former Independent columnist did last week at the conference organised by Tony Blair's favourite think tank, the Institute for Public Policy Research, in Westminster. "If you can't persuade your colleagues that they've got to go for this, you've got to doubt whether this is a government that can govern."

Tony Blair smiled a frosty smile. The invited audience of vice-chancellors and others laughed nervously. Aaronovitch can get away with such candour because he supports the bill, just as almost every serious commentator does. It is better for students because they don't have to pay tuition fees up front, but later when they can afford them and are earning at least £15,000 a year; the disadvantaged are looked after with bigger grants and bursaries; and the universities get some much-needed independence. Yet the Government is facing defeat. How come? The only conclusion is that Labour backbenchers are looking for an excuse to "get that bastard out of No 10", as Aaronovitch put it.

"If you want to get rid of the Prime Minister, don't undertake this rebellion at the expense of higher education and the students," he pleaded. "I think this is a very important moment in British politics as to whether we do something we should do or whether we are going to turn down the opportunity and make everyone suffer."

As Education went to press there were increasing signs that the rebellion might be petering out. But a solid hard core of opponents who are resolutely opposed to variable fees remains. And they could act to defeat Blair. A handful of new universities (the former polytechnics) are also against - though they don't want the bill to fall. "We want the legislation because we know that students will be better off," says Professor Mike Thorne, the vice-chancellor of the University of East London (UEL). But it is wrong for the Government to give universities the right to charge up to £3,000 for a course, he says. "It is committing us to a future that is at best uncertain and that many of us believe will not be rosy."

At present all universities in Britain's state-run higher education system receive the same funding per student for the teaching of courses. If some universities are able to charge more, that funding will become unequal and that will exacerbate the differences between institutions. Places that are highly rated already, like Cambridge, Warwick and Bristol will have no trouble attracting students.

But institutions at the other end of the scale like Coventry, the University of Central England and UEL could find themselves in ferocious competition for students and unable to recruit as many as they used to. The gap in reputation between "old" and "new" universities could widen, and the weakest could go to the wall.

"A marketplace would lead to a dogfight among the modern universities," says Professor Thorne. "They are intensely competitive with one another already but variable fees would increase that. The 'old' universities would trade on their brand names or would lower fees to scoop up the students in unpopular subjects."

The Government could avoid the chaos in the system resulting from introducing a marketplace into higher education by opting for the amendment proposed by some Labour rebels for an increase in the flat-rate fee to £2,500, argues Professor Thorne. That would keep the current funding regime in place.

The concerns of UEL are shared by some other new institutions, particularly in London where there is thought to be a surfeit of universities. Although no one in the Higher Education Funding Council or the Government would say so publicly, there is little doubt they would shed few tears if some of the weaker ones went to the wall. There is a widely accepted view that we have too many universities in the United Kingdom, particularly in certain cities. But it is impossible to close universities and pretty difficult to merge them. The marketplace might do what government can't.

To assuage such concerns, the Prime Minister has promised a review after three years. Professor Thorne, however, takes a dim view of this. "An institution could have gone bust by then," he says.

UEL has not yet decided whether to charge the maximum fee of £3,000, but it has developed four scenarios for the future. One envisages a flat-rate fee and student numbers remaining constant; the second a top-up fee of £3,000 and constant numbers; the third a top-up with some fall in numbers; and the fourth a top-up with a catastrophic fall in numbers.

Even the catastrophic fall would not mean closure, according to Richard Allanach, UEL's director of finance. It would simply mean the university would redouble its efforts to recruit overseas students. "The character of our university would change," he says. "We would be dropping some subjects and changing the students to whom we would reach out."

Because 41 per cent of the university's students are working class, the second highest in the country after the University of Wolverhampton, UEL will have to spend a great deal of money in bursaries if it is going to charge top-up fees. The vice-chancellor estimates that its bursary bill will be more than £5m. Contrast that with the money that Cambridge will have to find for bursaries. Because it has many fewer working-class students it will have a smaller bill. So, a bigger proportion of its top-up fee income can be ploughed back into improving education at a institution that already excels. "This is unfair," says Professor Thorne. "It is Labour's 'prole' tax."

Another university that has not yet decided whether to charge a top-up fee is Central Lancashire, which has been a running focus groups to try to find out how students will react. "We don't know what our students would do with income-contingent repayments," says Malcolm McVicar, the vice-chancellor. One option he is examining is not charging top-up fees at all. The other is to charge a top-up fee for every subject. Professor McVicar is against charging a top-up only for some subjects. And like UEL his university is against the idea of a marketplace in higher education.

Coventry University has commissioned research into what improvements students would like for their top-up fee. It wants to find out whether students be deterred from applying for courses with discounted fees. "My gut feeling is that we're being forced to charge at or near the maximum for all or most of our courses," says Mike Goldstein, Coventry's vice-chancellor. The changes may well be in students' interests - higher fees should mean a better education - but these are desperately uncertain times for the new universities.

l.hodges@independent.co.uk