Rolling back the Browne Review

A-Level students of a sensitive disposition would be well advised to avoid this week’s headlines. The Browne review’s recommendation that the cap on tuition fees be lifted will, we are told, open the way to five figure fees for top UK universities. While the coalition is unlikely to fully adopt Lord Browne’s recommendations, it is almost certain that tuition fees will be raised substantially, burdening students with high levels of debt. And given Vince Cable’s support of the review’s recommendations, David Cameron will be confident that Cable’s fellow Lib Dem government ministers will also be onside. In such a scenario, backbench revolt against the reforms would be futile.

But before supporters of the current system throw up their hands in defeat, they should consider the following.

Firstly there is no reason why a future Labour government could not re-impose a cap, or even abolish fees completely. Even if universities do end up charging Ivy League-style fees, they will still rely on the government for direct funding, research council grants, and contracts with the public sector. This gives the state a tremendous amount of leverage.

According to the latest statistics from the Higher Education Statistics Agency, UK universities received £11.9bn from public sources in 2008/9—just under half their total revenue. While increased tuition fees and government cuts are likely to reduce this funding, by the time of the next election a large proportion of money in higher education will come from the state. Even Harvard—one of the most expensive universities in America—received almost 15% ($559m) of its revenue from the US government in 2008/09.

A future Labour government could therefore simply threaten to bar any institution charging more than a certain amount from this source of revenue. Even those institutions initially prepared to forgo research grants are likely to reconsider once they find their top researchers moving to universities that were prepared to lower their fees.

Secondly, a future Miliband administration could also use the tax system to push university fees downwards. In a privately funded higher education system, charitable donations and endowments are likely to become an increasingly important source of income for universities. Indeed, UK universities already derive £357m from investment income on such endowments. Given that universities benefit from tax relief on the underlying donations, the government could instruct the Charity Commission to strip the priciest universities of their charitable status. These universities would therefore be taxed as private companies.

Such measures would undoubtedly provoke accusations of “meddling”. But the fact is that universities who want to charge like private companies cannot expect to receive the benefits of being quasi-public institutions.

Ed Miliband should be rubbing his hands at the prospect of a polarising debate about higher education. His first move must be to hold the Lib Dems to account for their flip-flop on fees. His second move? Start drawing up plans to roll back Browne’s reforms.