The Fee Increase Resolves Little

HE Participation

Participation in Higher Education has risen from 8% in the late 1970s, through the Blair years when the mantra: ‘education, education, education’ was heard, to the current participation rate of 50.2% (the participation rate is defined as those aged 17-30 that participate in HE)¹. When only 8% were participating Higher Education was substantively funded via the taxation system. At over 50% the cost becomes prohibitive. 

Tuition Fees

The Labour government under the leadership of Tony Blair first introduced means-tested tuition fees in 1998 via the Teaching and Higher Education Act. The Blair government introduced mandatory (£3,000p.a.) tuition fees which were not means tested (based on family income) in 2004. The principal of tuition fees established, levels were increased by over 67% by the coalition government in 2012 to £9,000. In 2017 the Conservative government increased fees to £9,250 and the current Labour government has enabled a rise to £9,535 next academic year (2025/26). 

The Funding Model

A cursory helicopter view of how we arrived at the current situation has merit but there are two issues of import. The first is that research undertaken by the Russell Group suggests that the deficit per home undergraduate (UG) student was projected to be £4,000pa during the academic year 2024/25.² Fees have increased by £285 which leaves a projected loss per undergraduate (UG) Home Student of £3,715 for each year of registration per annum. That well-worn phrase ‘sticking plaster’ has been used and one can see why. In short, this solves nothing. 

The Issue of Terms and Conditions

The other problem, snag, hiccup, bump in the road, twist in the tale – is a legal issue.  It is not clear how many Higher Education Institutions (HEI’s) will be able to increase fees for existing students or those new students who have already received offers. This knotty little issue will lay in the publicised Terms and Conditions (T & C’s) of different institutions and that most elastic and nebulous of English words; interpretation.

This potential Pandora’s Box of the unintended was acknowledged by the Government’s Skills Minister, Jacqui Smith when she answered a question on the 5^th November 2024 in the House of Lords: “Regarding students who have already started, the intention is that the tuition fee increase will apply to new and existing students, but that could depend on the contract and arrangements made between the university and the individual student. We will make further announcements on the changes to postgraduate support and the disabled students’ allowance in due course.”³

It’s not simple

One begins to sense that this is not a case of a simple and modest fee increase but more a hopeful walk along the Yellow Brick Road in search of the Wizard of Oz. En route, there are likely to be many surprises and challenges, and that is without mention of the Wicked Witch. The Competition and Markets Authority (CMA) has an opinion which is germane to this situation and it says that “a failure to provide information about total tuition fees for a course – all of the years, not just the forthcoming one – would count as a misleading omission in consumer protection law.”⁴

This does not mean that the student tuition fee for the first year must apply for the duration of the course. However, if potential rises in fees are not effectively communicated to students in a clear, accurate and transparent manner; any increases are likely to be exposed to legal challenges. 

The key factor in a ‘legal’ fee increase is the ability to foresee when entering a contract if and how fees might alter. Compliance therefore is rooted in limited and definable or verifiable conditions, in conjunction with valid reasons. In a scenario where inflation, defined by the Retail Price Index rises, means the costs of delivering a course will increase and a provider specifies its ability to increase fees in line with inflation as indicated by the RPI, this will probably be compliant. The proposition is anchored in an ‘objective verifiable index’. 

Specificity is important. The Office for Budget Responsibility (OBR) predictions often provide an interesting comparison with the RPIX or the CPI. The phrase ‘by inflation’ which appears in a preponderance of student contracts and on many HEI websites falls short of ‘objective verifiable index’. To be objective and verifiable clarity and specificity are required. The RPI, RPIX and CPI are all different as is the OBR’s less than exemplary record of forecasting.

It is easy to grasp that this labyrinth of all that is not simple, clear and easy, has a trajectory. Some institutions have altered their Ts and Cs from those that did not permit in-course rises to ones that do. The CMA says that the Terms and Conditions applicable are: “The Ts and Cs when you sign when you are made the offer.”⁵ One can easily see that this trajectory is going nowhere good. 

The Mood Music

The mood music can be heard from Ofcom, the CMA, ASA and CAP in other sectors. Ofcom has introduced a ban on telecom companies including inflation-linked price rises ‘in-contract’. This comes into effect on 17^th January 2025. The CMA concurred with Ofcom and stated that “the existing practice of inflation-linked price variation terms plus an additional percentage is likely to cause the consumer harm.”⁶ Further, it described ‘in-contract’ rises as an “unfair financial risk” to consumers. Similarly, the Committee of Advertising Practice (CAP) published guidance which took effect 15^th December 2023 which states that “…the presence and nature of mid-contract price increases are material information that consumers need to make informed transactional decisions….” ⁷ It is important to note that to date the CMA has not applied this published ‘thinking’ to Higher Education. On the other hand, there is the mood music……

Conclusion

In theory, student fees underwrite an expanding and world-class Higher Education system. In reality, the new fee cap will not meaningfully address the financial challenges universities face. During 2023 the Office for Students (OfS) said an increasing number of universities faced “a material risk of closure”, with 40% expected to operate budget deficits⁸. This is a serious and unresolved situation which is exacerbated by the modest and arguably inadequate fee increase of £285, which is unlikely to be applied ubiquitously to all home UG students because of non-compliant Ts and Cs. Consequently, even this ‘inadequate’ rise will have a muted impact. 

In the October 1881 – June 1882 Edition of the Yale Literary Magazine Benjamin Brewster wrote: – 

“In theory, theory and practice are the same. In practice, they are not.”

1. https://explore-education-statistics.service.gov.uk/find-statistics/participation-measures-in-higher-education/2018-19 ↩︎
2. https://russellgroup.ac.uk/news/russell-group-warns-of-long-term-squeeze-on-uk-skills-pipeline/ ↩︎
3. https://wonkhe.com/wonk-corner/fees-are-going-up-to-9535-or-are-they/ ↩︎
4. https://wonkhe.com/wonk-corner/fees-are-going-up-to-9535-or-are-they/ ↩︎
5. https://wonkhe.com/wonk-corner/fees-are-going-up-to-9535-or-are-they/ ↩︎
6. https://wonkhe.com/wonk-corner/fees-are-going-up-to-9535-or-are-they/ ↩︎
7. https://wonkhe.com/wonk-corner/fees-are-going-up-to-9535-or-are-they/ ↩︎
8. https://www.theguardian.com/education/2024/nov/04/university-fees-in-england-to-rise-next-autumn-for-first-time-in-eight-years ↩︎

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