Education & Family

MPs warn over tuition fees funding gap

Media captionMargaret Hodge said the new tuition fee funding model presented dangers for taxpayers and universities

England's universities could be hit by a funding gap worth hundreds of millions of pounds due to a miscalculation over how many will charge top tuition fees, MPs say.

The Public Accounts Committee (PAC) says more universities than expected are planning top fees of £9,000.

It warns that an over-spend could lead to further budget cuts or even fewer university places.

The government pays the fees upfront. It says the cost is not yet clear.

The Department for Business, Innovation and Skills says the cost to government will not be known until late next year when students have enrolled and received their loans.

Financial health

Universities are in the process of declaring their fees for new students in 2012-13.

When the cap on fees was lifted last year, ministers said the top rate of £9,000 could only be charged in "exceptional circumstances".

As the government pays fees upfront for students and recoups the money many years after they graduate, the MPs say it could cost taxpayers an extra £95m a year.

Reports suggest the average fee planned by universities is £8,765 rather than the £7,500 estimated by the government.

The PAC says it is unclear whether the trebling of university fees will deter students from applying.

The report says: "The funding council is not expecting any disorderly failures to occur, but a market-based system will increase risks to institutions and there is no guarantee that institutions in difficulty will be necessarily supported."

The report also calls for England's funding body, the Higher Education Funding Council, to ensure students have enough information about the financial health of the universities they choose to study at.

Committee chairman Margaret Hodge said: "The department must make sure that students are provided with relevant and reliable information.

"Where an institution is at higher risk, the current practice of the funding council is to disclose nothing publicly for three years in the interest of that institution.

"We do not accept this practice and, where students' investment and their education are at risk, urge earlier disclosure."

'Wrong sums'

A spokesman from the Department for Business, Innovation and Skills said many universities would offer extensive fee waivers and bursaries from 2012.

He said that by 2014-15 public support for universities could rise by 10% in cash terms.

"Under the new education reforms we are putting students in the driving seat, rather than allocating funding though a central grant," he added.

"Providing prospective students with clear, comparable information about what and how they will learn is a priority for our reforms."

Sally Hunt, general secretary of the UCU lecturers' union, accused the government of following the wrong course over higher education.

"Unless they pause, like they did with the NHS, they will do lasting damage to the sector," she said.

"It is clear they have got their sums completely wrong and that their entire funding model is in disarray."

National Union of Students president Aaron Porter said: "These poorly-conceived funding arrangements and a failure to model the impact of decisions on universities across the country have created great uncertainty and instability whilst at the same time looking set to increase the cost to the taxpayer."

Nicola Dandridge, chief executive of Universities UK, said there was still a great deal of uncertainty over the level of student demand and for which courses, and the extent to which students will take out loans.

"The final cost of the new funding system to the government is therefore far from clear," she said.

Mark Fuller of the 1994 Group of universities said even if the warnings of a funding gap for student loans prove accurate, the government must absolutely not cut places for students at the country's best universities.

"Growing numbers of students are keen to enjoy the benefits of an outstanding student experience, and it would be wrong to take away opportunities for them to do so."

The PAC report comes as Oxford University academics prepare to hold a vote on a motion of "no confidence" on the government's higher education policies.

On Tuesday, the university's governing body is due to consider a symbolic motion backed by about 175 academics.

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