The cut
“It is the case that a lot of the money received by Universities through the teaching grant and through HEFCE will in the future get to universities via students.”
Universities Minister David Willetts, 3 November 2010

The background
Today’s announcement to increase tuition fees was, said Universities Minister David Willetts, to deliver “a better deal for our students, for our graduates and our universities”.

But there was, probably not surprisingly, little mention in the announcement about the slashes to teaching grants from government that the Spending Review included.

It wasn’t missed by Labour politicians though, with Jack Straw challenging him about it in the ensuing debate.

“It seem to us on this side to be the most serious defect in what the right honourable gentleman is now proposing almost that pound for pound the increase in fees will be used to offset a reduction in Exchequer contribution.”

Yes, Mr Willetts agreed, increasing tuition fees to £6,000 – rising to £9,000 a year in “exceptional circumstances” – will save the government money.

But will the fees cover the shortfall?

The analysis
The Spending Review implied cuts to the teaching grant from government of nearly 80 per cent – the documents cut the higher education budget by 40 per cent, but that includes student support grants which are not being cut, suggesting that the cuts to the teaching grant are likely to remain at the 80 per cent level outlined in the Browne review.

The increase in fees, the Spending Review document said, will “offset” this fall.

But the Institute for Fiscal Studies’ analysis of Lord Browne’s proposals said that institutions would have to charge £7,000 a year in fees to match the loss of funding.

And Million+, the university think tank, estimate universities would have to charge £7,400 a year.

Yet David Willets set the standard amount universities could charge at £6,000 a year (the recommendation that Lord Browne put forward), which can only be increased in “exceptional circumstances”.

So that leaves a gap. And this, the Department for Business, Innovation & Skills says, will encourage efficiencies in the system, which they believe can be made. But efficiencies, as FactCheck has noted before, can be tricky things to predict.

Speaking on Channel 4 News tonight, Vince Cable seemed to acknowledge the dilemma – saying that “a substantial minority” of universities will have to charge above £6000 a year.

The verdict
There seems to be little doubt that the changes to higher education funding announced today represent a significant shift from government funding to student funding for their education.

But teaching will still be squeezed – and we’ll have to wait and see if universities can find efficiencies to cope with this squeeze without damaging teaching.