It was always going to be difficult for a Labour government to get it right on tuition fees. Having once promised they would be abolished, Keir Starmer’s team have been forced to announce an increase just months after assuming office.
In the face of mounting warnings about the crisis in university finances in England, and the very real possibility of some institutions going bust, ministers clearly felt they had no choice but to lift the cap and let fees go up, linked with inflation, to just over £9,500 next October.
The increase may sound relatively small – an additional £285 on top of the current £9,250 annual fee – but politically it is big. It is the first rise for eight years and as such is a measure of just how worried the government is about the state of higher education sector.
For vice-chancellors, the concern is the increase will be nowhere near enough. The University of Sussex’s vice-chancellor and president, Prof Sasha Roseneil, said the small increases in fees and maintenance loans announced by the government would begin to address their erosion by inflation, “but unfortunately neither students nor universities will find adequate solutions in these modest uplifts”.
For students, who already fear the burden of debt and worry they cannot afford to go to university, the fear is fee hikes may not stop there, with possible increases further into the lifetime of this parliament.
For the Conservatives who repeatedly shied away from increasing fees, it is evidence of more broken promises from Labour.
Many in the sector regard it as a temporary stopgap in advance of wider reform. Sam Freedman, former policy adviser to the Department for Education, spoke for many when he posted: “RPI increase in tuition fees is necessary as a holding policy to stop the HE sector falling over, but it’s not a solution to a funding model that is putting young professionals under too much pressure (alongside housing costs and lower income tax thresholds).”
So how did we get here? When tuition fees were tripled to £9,000 in 2012 by the coalition government, universities in England enjoyed a brief boom time. Many took advantage of low interest rates to borrow heavily from pension funds and investment banks to invest in smart new buildings.
Many are still paying off those loans but their income has fallen as a result of the long freeze in domestic tuition fees – which have not gone up since 2017, and then only by an additional £250.
Vice-chancellors have attempted to plug the gaps with more international students, whose fees are not capped and are therefore far higher, but that funding stream has been hit by the previous government’s clampdown on student visas.
The result is that 40% of England’s universities are expected to run budget deficits this year, and there are rumours that three or four universities are in serious difficulty, while dozens of others have been forced to cut staff and cancel courses. Now it falls to students to help ease the burden on their universities.
The Institute for Fiscal Studies said that if the government continues to increase fees in line with the RPIX measure of inflation each year, the tuition fee cap could reach £10,680 in 2029-30 on current forecasts. “If the government is planning to continue to raise the fee cap with inflation, it should say so – and provide some certainty to universities and prospective students alike,” it said.
Kate Ogden, a senior research economist at the Institute for Fiscal Studies, said: “University vice-chancellors will be breathing a sigh of relief that the government is not extending the tuition fee freeze, sparing universities a further real-terms cut to resources of about £390m next academic year.
“Of course, higher fees today mean higher student loan repayments in the long run – with graduates eventually repaying around three-quarters of the extra borrowing resulting from today’s announcement.”
On the increase to student maintenance loans, she said the government had failed to reverse substantial real-terms cuts in the level of support seen in recent years. “Even after the uplift, the poorest students will be entitled to borrow about 9% less next academic year than an equivalent student five years earlier,” she said.
The fear now is that the increase in fees could deter students – particularly those from disadvantaged backgrounds – from going to university. As one first-year product design student told the BBC: “I think it’s already quite a big factor playing on a lot of people’s minds not to go to uni, so increasing it is quite a big factor.”
