Opinion: ‘A free-for-all, and expensive for some’

There will be a long, drawn-out and noisy reaction to whatever Lord Browne of Madingley proposes about the funding of higher education tomorrow.

Since there is going to be trouble, we should just get it over with and adopt the only sensible policy. It can be summed up in a simple slogan: “A free-for-all, and expensive for some.” It is a policy that both the University and College Union and the Sutton Trust will hate, which should recommend it to rational people.

It goes like this. Universities should be free to charge whatever they like for tuition. No caps, no nothing. The government should get out of the business of price-setting and confine its efforts to sustaining research. It is absurd that universities in the UK charge entirely uneconomic fees to students from the European Union, including the UK, and economic fees to students from outside the UK/EU; they should charge the same fees to all comers.

The reason is simple: if everyone charges enough to cover their costs – they are charities, and therefore not-for-profit corporations – the economy of the more efficient will be reflected in providing the same service for lower fees than their competitors. Those that charge higher fees will have to justify them in the pay-off to their students.

The second proposition is that the government should return to the old system of state studentships, and encourage ambition by giving tuition grants that reflect both the ability of a student’s family to pay the tuition fees and the academic quality of the student and the university she or he attends.

If the University of Cambridge, let us say, decided that £15,000 a year just about paid the bills for an undergraduate degree – other than medicine – my withers would be entirely unwrung by protests from families who complained they had already spent more than twice as much each year for the past four years to send their offspring to Winchester, Millfield or Badminton.

You would have to do some pretty intrusive policing to ensure that the child of an affluent divorcee did not get the whole ride for free because daddy had organised his affairs so that his former wife appeared to have no resources.

It is a major source of resentment among students when this happens under the present system, as it does. It is not only Greek doctors who know how to play the tax system, and making both parents liable for their children’s fees would be essential. So would counting the unspent equity in their houses and their non-pension savings in the same way as the American federal assessment of a family’s ability to pay for higher education. It would be simple to borrow the American system; adapting it to British needs would be an afternoon’s work for the Treasury.

Conversely, someone from a really hard-up background should get their tuition free or nearly free. Since attainment at A level is so tightly linked to family income, it would not be hard on the public purse, and if it had the effect of waking up some unambitious schools, that would be all to the good.

It would need some intelligent arm’s length negotiation between governments and universities. No government could just open its chequebook, but there is a lot of room for manoeuvre between the present Soviet-style command economy and total chaos.

The size of a government tuition grant would effectively constrain a university’s ability to rip off the customers. The pressure to provide adequate bursaries would fall very heavily on universities that charge high fees, who would be in danger of losing their charitable status if they allowed too large a gap to open up. A government that offered £10,000 a year to the worst-off cohort with 3 A*s would find Cambridge kicking in £5,000 without much complaint.

If we went down the track of “no caps, no nothing”, there are two other essentials. The first is that universities should lose their safety nets and management should be held accountable for their performance. The trustees of charities are liable for their debts, and a bit of that discipline would concentrate managerial minds.

Recent disasters look like those suffered by Americans who with no jobs and no assets took out colossal sub-prime mortgages. Yet the people who have done it are supposedly good managers backed up by properly trained finance officers and accountants, not illegal immigrants in southern California.

The second is that universities should publish the career profiles and average earnings of their alumni. Given that GPs earn more than £100,000 a year on average and the social profile of medical students is heavily slanted towards the upper end of the income scale, nobody should mind too much that they will have borrowed a lot when young or that their parents will have spent a lot.

On the other hand, a place that barely adds £1,000 a year to the incomes of its students ought not to be charging £5,000 a year in tuition fees unless it is justified by its contributions to non-monetary goods such as interesting art or new music.

And governments could focus on ways to improve the educational ladders we currently neglect: more use of sixth-form colleges, more portability for credits, greater willingness to let students turn a three-year degree into 2+2 if it suits them better.

Re-entry students, part-timers, and second-career students need more attention. It is easier to think about them if the easy part is done once and for all. The present system is broken in the same way the Ptolemaic astronomical system was broken – cluttered with epicycles and computational nightmares – it is a good moment to go for a clean break.

As to how it can be done; the secretary of state need only announce that he proposes not to use the “Henry VIII” clause that allows him to claw back any amount charged by a university above the fee level he decides.

That done, he can move money between the Higher Education Funding Council for England and student support as he likes.