- This remarks were made by Nick Hillman, HEPI Director, at Birkbeck, University of London, on 16 January 2025.
Entering into higher education policy by accident
Like almost everyone else working in higher education policy, I fell into the area by accident. In the second half of 2007, I was invited to go and work as the Chief of Staff for the Shadow Cabinet member David Willetts. I had worked for him in the past as a parliamentary researcher, near the turn of the century when he had been the Shadow Secretary of State for Work and Pensions. But by the time I was invited back, he was serving as the Shadow Secretary of State for Education.
I accepted the job and expected this to mean I would be working primarily on schools policy. After all, schools were the most high-profile part of the education brief and I was a former secondary school teacher, so I had first-hand experience of standing at the front of the classroom. Moreover, higher education issues tended to be covered by another member of the shadow team – until recently, that had been Boris Johnson but, as he had just chosen to fight for the Conservative nomination for Mayor of London, the role had fallen to Rob Wilson, then a Reading MP and now Deputy Chair of the Social Mobility Commission.
However, in the period between my agreeing to go and work for David Willetts once more and actually starting the job, Gordon Brown split the Department for Education and Skills in two, setting up the Department for Children, Schools and Families (DCSF) under Ed Balls and the Department for Innovation, Universities and Skills (DIUS) under John Denham. David Cameron decided Michael Gove should shadow DCSF and my boss, David Willetts, would shadow DIUS. So that is how I – like so many others – ended up working in higher education policy entirely by accident.
I am grateful to Gordon Brown for that both because it is such a fascinating area to work in and because my own experience of higher education had not been stellar. When I was an undergraduate student back in the early 1990s, UK universities were in a poor state. At my institution, I had lectures with over 500 other people in a university that did not have a single lecture hall with 500 seats – so you either had to arrive early, watch on a shoddy video link in a next-door room or simply not bother. Next-to-no academics knew our names and there were not enough beds to accommodate all the freshers who wanted one so, at the start of the year, students would be put up on camp beds in the students’ union. That experience made me keen to work on higher education policy when offered the chance to do so, if only to see how to try and ensure such a situation never returned.
2007 to 2012
At the time, back in 2007, higher fees of up to £3,000 had recently been introduced, while maintenance grants had returned a few years earlier, and universities were growing – albeit not as fast as they needed to in order to sop up all the rising demand.
Tony Blair had faced down his critics by getting the Higher Education Act of 2004 through and the new Prime Minister, Gordon Brown, despite having flirted with the idea of a graduate tax when he was the Chancellor of the Exchequer, showed no sign of ripping the settlement up. David Cameron’s Conservative Party was also slowly reconciling itself to higher fees, despite Michael Howard’s leadership opposing Blair’s plan when it was going through Parliament as well as at the 2005 general election.
One of the concessions that Blair and Charles Clarke, the Secretary of State for Education and Skills, had felt forced to make during the passage of their legislation was to commit to a review of the new fees after three years of their operation. Exactly 20 years ago, in January 2004, Charles Clarke told the House of Commons:
I accept that some colleagues have genuine concerns about the impact of variable fees on our university system. The Government will therefore establish an independent review, working with OFFA [the Office for Fair Access], to report to this House, based on the first three years of the fees’ operation.
This led of course in time to the review under John Browne that was set up by Peter Mandelson, the Secretary of State for Business, Innovation and Skills, in 2009 and which reported to the Coalition Government in the autumn of 2010.
I have always regarded it as one of the neat oddities of UK higher education policy that the Browne review, which led to much higher tuition fees, was a direct result of the far-left rebellion against variable fees capped at £3,000. (Look out for two other oddities I shall mention later.)
You will recall that the Browne review’s recommendation was for there to be no fee cap whatsoever, with a levy on fees above £6,000 to help cover the additional loan write-off costs. But no major modern higher education review, whether we are speaking of …
- the Anderson report of 1960 …
- the Robbins report of 1963…
- the Dearing report of 1997…
- the Browne report of 2010 … or
- the Augar report of 2019 …
has ever been accepted in its entirety.
And so, rather than the Browne report’s model, we implemented fees capped at £9,000 for regular full-time undergraduate courses. In essence, we avoided the need for major new primary legislation by keeping the Blairite settlement and uprating the fee limits to such an extent that classroom-based subjects no longer needed any teaching grant.
The cap was set at the precise figure of £9k for three reasons.
- First, because it is always worth pitching high when negotiating with the Treasury.
- Secondly, because we thought our Lib Dem colleagues might beat the figure down (which of course they never tried to do, going instead into an internal funk on the binary question of whether to back fees at all or whether to support fees at the much higher proposed level).
- Thirdly, because – in another oddity of higher education policymaking – the then Vice-Chancellor of the University of Portsmouth, an economist called John Craven (not the newsreader), booked to see David Willetts at his constituency surgery on the south-coast. At this meeting, Professor Craven explained the cost base of a regular university such as his. He said that once you had taken into account factors like falling capital funding, rising prices and additional access expectations, then a maximum fee of £9k in 2012 quickly came to seem, if not entirely reasonable, not entirely crazy either. We kept the scrappy piece of paper with the notes on from that meeting for a long time afterwards in a drawer in David Willetts’s office and it may still exist somewhere.
In my view, and feel free to disagree as much as you like, the 2012 system worked beautifully well. At a time when neither the taxpaying public nor the Treasury were willing to spend more on higher education, we were able to increase the amount spent on each student as well as to raise maintenance support for students.
Most importantly, although it took a battle with Number 10 and the Cabinet Office lasting three long years, we were subsequently able to remove the penal student number controls that had blocked people from bettering themselves through accessing higher education. It always amazes me when so-called progressives argue for that to be reversed.
(Incidentally, I was shocked to read the other day that well-respected organisations like the OECD, NatCen and the NFER think the end result of removing number caps is an ‘overqualified’ working-age population, as if it is a bad thing to know more stuff. But it turns out this claim might be nonsense even in its own terms: a HEPI blog over the Christmas break by Golo Henseke and Francis Green of the Institute of Education suggests the figure for overqualification ‘may be misleading, stemming from methodological quirks specific to the English data’ before going on to show a lack of opportunities is much a bigger challenge than an increase in graduates.)
At the height of the student protests about the new post-2012 system of £9k fees, the Conservative Minister Ken Clarke said to us privately something along the lines of, ‘Don’t worry about the reaction – just so long as you are confident that the higher education sector will be better by the time the next election comes around, just stick with it and people will see the benefits.’ We were and we did and, in 2015, the electorate seemed to approve.
Errors
I think we did make two significant mistakes, however. The first was to assume the Office for Fair Access, which had initially been another Blairite sop to the tuition-fee rebels, had more power than it did to enforce variable fees. In fact, it had only one real power: blocking £9k fees, forcing a university to charge no more than the lower limit of £6k.
In other words, it could not say to a university, ‘We like your Access Plan more than we like the Access Plan of that university over there but not as much as we like the Access Plan of another university somewhere else. So we have decided you can charge £7.5k while others can charge £9k and others are limited to £6k.’
OFFA famously regarded the binary power of setting an institution’s fee cap at either £9k or £6k as a nuclear deterrent – in other words, powerful but not to be used in practice. So we ended up, just as Labour had before them, with pretty much every university charging the maximum fee allowed.
The second mistake was that, while we were right to assume the polling from the NUS and others suggesting school leavers would be deterred by higher fees was wrong, we were wrong to assume the polling suggesting part-time and mature students would not be deterred was right. To put it more simply, according to the polling of the time, younger people would be put off from higher education as a result of the higher fees while older people would not be. In fact, the big increase in fees did lead to a continued and sharper fall in the number of mature and part-time students that has yet to be properly reversed, though perhaps the Lifelong Learning Entitlement will do it?
Why did fees not rise with inflation?
These days, I am often asked why the £9k fees did not go up each year in line with inflation – after all, Tony Blair’s £3k fees went up every year with the changing value of money and no one batted an eyelid.
The answer is that, once fees had bunched at £9k, the Treasury came to be so worried about the financial exposure from student loans that the idea of annual fee rises went out of the window. A higher average fee / loan than initially expected, combined with endless newspaper stories (often based on HEPI’s work at the time) about how the Government had underestimated the loan write-off costs, meant annual fee rises were out of the question. At least, that is, until Jo Johnson came along five years later with the Teaching Excellence Framework (TEF), which sought to link fee increases to student outcomes.
But the one-off fee increase of £250 that eventually happened in 2017 was not repeated at any other point during the period of Conservative administration up to July 2024. As Jo Johnson explained in a piece for HEPI last year:
no one much liked the accountability of the TEF and the [higher education] sector, demonstrating its ability to miss the wood for the trees, had produced all manner of reasons to object to the methodology behind it.
In his piece, Jo Johnson also criticised vice-chancellors for not caring enough about fee rises to set a precedent at a time when inflation was low, leaving them highly exposed when inflation rose significantly later on.
Moreover, another forgotten oddity in higher education policy is that the ‘wash-up’ on the Higher Education and Research Bill conducted just before the 2017 general election made it much harder to raise tuition fees each year. (A ‘wash up’ is the period of intense compromise on impending legislation that tends to occur in the days before a dissolution of Parliament prior to a general election.)
Before the commencement of the Higher Education and Research Act’s provisions, fees could be increased in line with inflation without a vote in Parliament (under the so-called ‘negative resolution procedure’). From now on, even fee increases in line with inflation needed positive votes in both Houses of Parliament – the so-called ‘affirmative resolution procedure’. That continues to be the case today.
Given the inconclusive result, it might be said that there were a number of things that were unfortunate about the 2017 general election and this was certainly one of them. Not only had it become harder to pass a fee increase but, even if it hadn’t, both the Prime Minister, Theresa May, and the Leader of the Opposition, Jeremy Corbyn, wanted to reverse the shift towards higher fees. And there was no fee rise under Boris Johnson or Rishi Sunak either.
Nonetheless, we have recently had an announcement from the newish Government that fees will rise by inflation in 2025/26. The Labour Government have proved braver than their immediate Conservative predecessors. But while this is better than nothing, all the money and more is being snaffled back in higher National Insurance rises. Meanwhile, Ministers have avoided saying whether it is a one-off rise or the start of annual rises, so – as I see first-hand as a governor of both the second-largest and the smallest university in the UK – long-term planning remains very hard.
I have said elsewhere I do not believe the new money is anything like enough – I would raise the fee cap each year by more than inflation (something like RPI plus 2%) and I would make it clear that this is a long-term commitment for the length of this Parliament or even the next decade.
Back to the future
I would do this because the system we have is not broken; it has just become out-of-kilter with reality thanks to a refusal to recognise what every schoolkid knows: money changes value over time. In other words, the system we have is clogged up rather than broken.
Using universities’ own numbers, the Office for Students predicts ‘nearly three quarters (72 per cent) of higher education providers could be in deficit by 2025-26, and 40 per cent would have fewer than 30 days’ liquidity.’
The end result is that we are journeying fast back to the situation I found when I matriculated 35 years ago: a deteriorating staff:student ratio; worsening university estates; and insufficient student beds. A few days ago, the Institute for Fiscal Studies (IFS) said not only that ‘the real-terms value of the tuition fee cap [has] fall[en] by 22% between 2017 and 2024’ but that ‘upfront funding per student’ is, in real terms, ‘back to the same level as in the early 1990s.’
The answer back then was to commission the Dearing report – Ron Dearing was later HEPI’s first Chair – but we do not need another review today: every official review we have had in recent decades has recommended something like the funding model we have. What we need is for the system to be recalibrated so that institutions and students have the resources they need to thrive and meet their potential.
It is perhaps also worth noting here that the IFS’s report also makes it clear that the Government’s new fiscal rules presuppose the direction of future policy by further increasing ‘the relative appeal of providing additional teaching resources through tuition fee loans rather than direct grants’.
Conclusion
I will draw my recollections to an end here and note that they are only my personal views and experiences. HEPI, as Rose (Stephenson) and Tim (Leunig) and Johnny (Rich) and Alison (Payne) will show throughout the day, has published a very wide range of alternative views on student finance and we are not a lobby group pushing for any one model over others: we are a home for debate. If you have a different idea of your own, do think about writing it up for HEPI or else the CDBU.
But let me make one more plea before I sit down. If the Government accept my basic line of argument that the current system is not broken, and that it just needs a polish, then Ministers should get behind it. At the moment we are in a very odd place where the Government is brave enough to increase the fees a little but to do so only in an apologetic way as if it doesn’t really like the student funding model it has been lumbered with (and even though it was one of the great reforms of New Labour’s time in office). When raising fees, Bridget Phillipson told the House of Commons time and time again that it was a ‘difficult’ decision.
That is nonsense. Ministers have tried to make the blindingly obvious policy decision of raising fees in line with inflation look like it is much more difficult than it really is. But if they are going to stick with the model we have, and I may be in a small minority in this room in thinking they should, then they would be better to focus on the system’s strengths and to talk up the benefits to prospective students, their parents and the whole world.
Otherwise, if you will let me end with an analogy with the 2016 Brexit referendum, they will pull the rug from under themselves in exactly the same way as the Remain campaign sowed the seeds of its own defeat when its main players looked embarrassed rather than proud of the status quo that they were defending.