Labour peer says costs should increase in line with inflation. However, universities would still face ‘tough choices’
Peter Mandelson stated that tuition fees, which English students pay, must rise to stave off the “severe and worsening” financial burdens universities are facing.
Mandelson, a candidate to be Oxford University’s next chancellor and Labour peer, stated that raising the tuition for domestic undergraduate students from £9,250 to £9,480 a year would stabilise the universities while the government works on further reforms to higher education and student funding.
Mandelson stated, “England’s universities have reached an inflection point. Financial pressures are severe and worsening.”
He called for a raise in future tuition fees and inflation capped at a 2.5% annual increase. However, he also recommended that universities need more support to improve the number of students from less privileged backgrounds.
Mandelson stated: “I believe introducing some form of inflationary link to domestic tuition fees would be a fair approach, recognising the country’s very tight fiscal constraints and the need to steady university finances.” “It would ensure fees do not become more expensive in real terms for students while securing the value of this income for universities. This would be a stabilising move ahead of further much-needed reforms both to improve university finances and make the loans system fairer for individuals.”
In return, he stated that universities would need to make “more tough choices” to improve efficiency, noting that the UK universities have one teaching staff to 13 students. In contrast, Italian state universities have 21 students to a teaching staff.
At the Labour conference, Jacqui Smith, the skills minister, stated that changes to student maintenance funding were being considered.
Smith stated: “We totally hear the message that cost of living has impacted students almost more than any other group. And if you want to have the kinds of changes on access we’ve talked about, maintenance has to be part of it. That’s all I’m willing to say at the moment.”
Mandelson also proposed a more progressive system of student loans, with a flexible payment system starting at 2% of a graduate’s income and increasing by 2% for every £10,000, up to a maximum of 8%.
Mandelson, who is currently the chancellor of Manchester Metropolitan University, will step down in January. He said an economist disclosed that a progressive system had similar costs to the one in place now, which takes 9% of graduates’ income over £25,000 by cutting down repayments for low and middle earners and raising repayments a bit for high earners.
He stated: “This would be particularly beneficial for women, who are more likely to pursue degrees in subjects that are crucial to public services, such as nursing, but whose salaries can be comparatively low.”
Tim Leunig, an economist and adviser to the Treasury and the Department for Education under the Conservatives, said in the Labour conference fringe meeting that the current loan system should be tussled in favour of a proposal involving graduates paying a minimum of £10 a week.
Leunig said the repayment term for student loans should be halved to 20 years, with interest no longer accruing because the 40-year term was “absurd.” In addition to graduates repaying at least £10 a week and more according to their earnings, employers should pay a 1% surcharge on each graduate they hire.
