UK: University leaders wrangle over call from business

UK's business leaders called for higher tuition fees, commercial interest rates on loans and a halt to higher education expansion.

While the groups representing élite research-led universities welcomed the proposals from a task force established by the Confederation of British Industry, the million+ group of newer universities attacked it for running counter to President Obama's 2020 initiative in the US.

The report, Stronger Together: Businesses and universities in turbulent times, coincided with wavering by the Liberal Democrats over their pledge to end tuition fees. Criticism was also voiced by the National Union of Students, and lecturers' leaders complained that the two main political parties were using the promised review of student finance to avoid making their policies clear ahead of next year's general election.

The CBI task force - with members from business and universities - said that "new thinking is required on the financing, structure and mission of our universities if they are to sustain and strengthen their position in a rapidly changing environment".

It recalled that the government had already asked universities in England to make savings of £180 million (US$240 million) between 2009 and 2011, and that many are budgeting for cuts of 10% to 20%.

To preserve the quality of teaching and research, cuts should be focused on internationally-generous student support and the government target of 50% of 18 to 30-year-olds participating in higher education should be shelved.

Richard Lambert, director of the CBI, said: "Of course, it's never easy to ask students to pay more, but the UK's student support is on a par with some of the most generous in the world, and the priority must be to preserve quality as well as assisting those unable to pay to ensure that higher education remains open to all."

The task force does not set the fee level it thinks should be levied but said an increase in fees appears inevitable. The umbrella group Universities UK has calculated that increasing the fee cap to £5,000 from 2012 in England would deliver an annual increase in income for universities of £1.25 billion from 2014 without leading to a decline in student demand.

The cap on fees should stay - at a higher level - but the subsidised zero real terms interest rate on loans should be phased out in favour of a rate set at the government's true cost of borrowing, according to the task force.

Paul Marshall, executive director of the 1994 Group of 19 smaller research-led universities, said: "The fees cap needs to be high enough to bring in sufficient funding and enhance competition to further drive up quality. In addition, a sensible interest rate should be introduced on student loans, set at the current government cost of borrowing, to rectify the huge subsidy that the government currently pays."

Dr Wendy Piatt, director general of the Russell Group of 20 leading universities, said: "The CBI is right to call for an exploration of new sources of funding and to say that the priority is to maintain quality rather than expand numbers...

"The Russell Group has been investigating a range of options to solve the funding crisis and to ensure that financial burden is spread more fairly. An increase in tuition fees, as recommended by the CBI, is clearly one of those options but we want to be 100% sure about the impact of any changes to fee levels on students before putting forward our own proposals. As the CBI report shows, the evidence to date is very promising."

But Pam Tatlow, chief executive of million+, said: "The CBI's recommendation that the government should drop its aspiration to encourage 50% of people between the ages of 18 and 30 to study at university is the wrong approach in a recession which has already caused one million young people to be unemployed.

"The CBI's approach contrasts very sharply with that in Sweden and in the United States where President Obama has backed the growth of higher education with additional funding. It is also disappointing that business leaders want fewer places but students to pay more."

Three vice-chancellors sat on the task force: Professor Madeleine Atkins, Vice-chancellor of Coventry University, which belongs to million+; Professor Glynis Breakwell, Vice-chancellor of the University of Bath, which is part of the 1994 Group; and immediate past president of UUK Professor Rick Trainor, principal of King's College London, which is in the Russell Group.

The response from UUK was carefully nuanced to avoid exacerbating the potential rift. Professor Steve Smith, its president, welcomed the report as a "positive and constructive contribution to the debate" but added: "We recognise that some of the recommendations will need further discussion with the various interested parties and the UUK membership will be ready to engage in the debates."

Wes Streeting, President of the National Union of Students, described the report as offensive, and said: "Students are already leaving university with record levels of debt, while graduate job prospects are at an all-time low. Instead of recommending that students are fleeced even more than they already are, the CBI should start looking at how they might put something back into the system themselves."

The NUS also criticised the "hypocrisy" of the CBI's suggestion that the government's widening participation agenda should be relaxed. Streeting said: "When the fat cats at the CBI recommend that we abandon targets for widening participation from poorer students, they are talking about restricting the opportunities of other people's children rather than their own. This is gross hypocrisy."

Sally Hunt, general secretary of the University and College Union, said: "The silence on the future of higher education from the main political parties is allowing tired business rhetoric to be viewed as a real contribution to the debate...To suggest that a rise in tuition fees is inevitable because the CBI favours that approach is quite incredible, particularly with the country in recession.

"The political parties need to come out and make it quite clear where they stand on the future of university funding so the electorate can make an informed choice at the ballot box next year."

The task force was chaired by Sam Laidlaw, Chief Executive of UK energy giant Centrica, and the 16 business members included the chairman of AstraZeneca Pharmaceuticals, a former chairman of global markets for the troubled Royal Bank of Scotland, the chief executive of Network Rail, the CEO of McDonald's Restaurants in the UK and the managing director of Microsoft in the UK.