Vince Cable will have to deliver a deal acceptable to rebel Lib Dem MPs
Business Secretary Vince Cable is under intense pressure to deliver a deal on tuition fees which will be acceptable to Liberal Democrat MPs.
Mr Cable is set to respond in the House of Commons to Lord Browne’s proposals calling for an unlimited level of tuition fees for students in England.
A backbench rebellion is threatened – and the Lib Dem party said that it remains party policy to scrap fees.
Students have warned that raising fees would mean “crippling debts”.
The UCU lecturers’ union said the plan, which could see fees rising to as much as £12,000 per year, was “the final nail in the coffin for affordable higher education”.
Lib Dem MPs will be waiting to see whether Mr Cable can offer any more progressive elements to Lord Browne’s proposals.
There have been suggestions he will call for higher-earning graduates to pay back student loans at a higher rate of interest than the 2.2% plus inflation set out by Lord Browne.
Accepting the main proposal of Lord Browne, that the limit on fees should be lifted, presents deep political difficulties for the Liberal Democrats.
The party’s MPs, including Mr Cable, signed a pledge at the election to vote against any increase in fees.
Party leader, Nick Clegg, made a video for students in which he delivered a personal message saying that tuition fees were “wrong” and that he would oppose them.
The press office of Mr Cable’s own party said it is still policy to scrap fees – despite the expectation of Mr Cable entirely contradicting this by endorsing an increase in fees.
Mr Cable will have to find a form of compromise that will allow his MPs to accept a deal on higher fees – despite warnings from students that they will challenge MPs who “betray” their election pledge.
The blueprint for universities in England set out by Lord Browne would see an emphasis on competition.
It calls for the current £3,290 cap on fees to be scrapped and replaced by a free market, in which universities set their own charges for different courses.
Universities should no longer face limits on how much they should charge, says Lord Browne’s report
But Lord Browne’s review proposes that universities that charge more than £6,000 a year would lose a proportion of the fee to help cover the cost of student borrowing.
Lord Browne said: “We have taken off the cap but we haven’t taken off the restrictions.”
He said all universities were different and needed different amounts of money, but he predicted that few would put fees very high.
He acknowledged graduates would be paying significantly more back in their tuition fee and maintenance loans but insisted they were not being left with “mortgage-style debts”.
“They would be paying the same interest rate as the government uses to borrow. They will only pay it back when their earnings go above £21,000,” he said.
The report comes ahead of next week’s comprehensive spending review, in which major cuts to higher education funding are expected.
Lord Browne sets out a system in which much of the cost of a degree would be transferred from the taxpayer to the student.
Shadow university minister John Denham said the report reflected the belief that teaching budgets would be cut by around two-thirds.
“This is a massive cut even when set against the coalition’s aim to cut spending by 25%,” he said.
NUS President Aaron Porter: “If people have the ability and the aspiration to go to university, they shouldn’t be priced out”
This more competitive market would also mean that for the first time universities could go out of business, says the report.
Universities must compete over students, fee levels and against new providers, the review panel recommends: “If they fail… they might ultimately close or be taken over.”
The report seeks to balance higher charges with support for applicants from poorer families.
As now, students would not have to pay fees up-front, but would receive a loan.
But they would not have to start repaying it until their earnings reached £21,000 per year, up from the current level of £15,000.
All students will be able to borrow £3,750 per year – and young people from families earning less than £25,000 will receive an additional grant of £3,250.
There have been warnings that middle-income families will face a particular financial squeeze from such a fee hike.
“There is a feeling that the rich can afford it – and the poor will quite rightly be protected – but people in the middle could find themselves really penalised,” says Justine Roberts of the Mumsnet website.
If accepted by the government, the reforms are expected to take effect in 2012 at the earliest.
Paul Marshall, executive director of the 1994 Group of research-intensive universities, welcomed the review as “the first progressive step” towards increasing funding for universities.
But the Million+ group of new universities said it would deter poorer students, and would “undoubtedly mean that some students who would have gone to university will decide not to go”.
The Russell Group of leading universities said the higher charges would provide necessary extra income.
“That’s because, bluntly, our leading institutions will not be able to compete with generously-funded universities in other countries if they are not able to secure extra funding.”
The National Union of Students said students would be left with “crippling levels of debt and many universities face utter devastation as a result of horrific cuts”.
Elsewhere in the UK, Scottish students studying in Scotland do not have to pay any fees. In Northern Ireland and Wales, fees are charged up to a maximum of £3,290 a year.
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