Education: University funds on a tight rein - but can they break free?

The new Labour government has set its face against universities charging any more than a flat-rate pounds 1,000 fee from autumn 1998. But will it be able to stop them levying extra charges when they find the money they're getting from government is inadequate? Lucy Hodges investigates

The Education Secretary, David Blunkett, is dead against top-up fees in excess of the pounds 1,000 for tuition repayable after graduation. He has been saying so since Labour came to power five months ago. At September's party conference he said sternly: "Our programme is entirely geared to preventing top-up fees and no top-up fees will be charged under our programme."

Baroness Blackstone, the higher education minister, supports him. She believes top-up fees would work against equality of opportunity. They would mean elite universities - those at the top of the unofficial British Ivy League such as Oxford, Cambridge, Durham and some London colleges - being able to charge more than others and still recruit undergraduates. But bright students from modest families wouldn't be able to afford the extra amount. And that would put pressure on the Government to pay out more to the elite universities to recruit these deserving students, she believes.

Ministers are supported in their opposition to top-up fees by many MPs. One is Margaret Hodge, chairman of the House of Commons select committee on education. "My position is that I am against anything that would encourage greater division in the tertiary sector and I think top-up fees would do that," she says. "The answer is to use the Dearing report to sort out funding for higher education."

But Mrs Hodge also urges universities to come to terms with constraints on public funding just as schools and hospitals have done. Arguing that the elite universities have not looked closely enough at new ways of working or at the balance between teaching and research, she recommends they do so. "How many hours a week do academics teach at Oxford and Cambridge?" she asks. "Some of them have got away with five hours a week and they have got to change, just as headteachers and hospital consultants have changed."

University vice-chancellors are split on the issue, though the official line of the Committee of Vice Chancellors and Principals (CVCP) is to oppose top-up fees. Broadly speaking, the split is between the old and new universities: old universities provide a more expensive education, are oversubscribed and recruit students from better-off families, so they feel they need the money and would not suffer from an extra charge; new universities have more trouble attracting students and emphasise access, so they oppose any move that could make their job more difficult.

But the big question is whether the Government can or will try to stop universities from charging extra. Initially, Mr Blunkett talked about the Government bringing in legislation to prevent top-up fees. Recently, he has dropped talk of legislation. It is known that the Government has been taking legal advice on the matter. Outside experts believe it would be difficult to legislate.

Certainly, the CVCP's legal advice from the London solicitors, Eversheds, is that drafting legislation to outlaw top-up fees would be tricky because it would be difficult to separate fees that were lawful (eg charging for field trips, bench fees and photocopying) from fees that were unlawful. Moreover, such legislation would probably have to be enshrined in a peculiar kind of bill, known as a hybrid bill, because of all the exemptions it would have to contain. And hybrid bills rarely see the light of day.

According to Phil Willis, higher education spokesman for the Lib Dems, the Government might also run into trouble in Europe with such legislation. He claims to have received free legal advice from an unnamed source that UK universities could challenge a law stopping top-up fees at the European Court of Justice in Luxembourg or the European Court of Human Rights in Strasbourg. All of which worries him deeply because he opposes top-up fees, though he regards them as inevitable given the Government's solution to the universities' funding crisis.

All a Department for Education and Employment spokesman would say was: "If lots of colleges insist they are going to charge top-up fees, we will have to consider what action to take, including legislation."

The consensus is that any university brave enough, or angry enough, to buck the government line would probably be clobbered by informal means. It would find its block grant chopped by the Higher Education Funding Council by the amount it raised in top-up fees. However, the experts think the Government could get away with such draconian measures against one or two universities but would find it harder to move against half a dozen or more.

Alan Smithers, Professor of Policy Research and Director of the Centre for Education and Employment Research at Brunel University, wonders whether it's wise for the Government to want to control universities so much. "I am for cutting them loose as far as possible so they can develop in their various ways," he says. "If there are lots of people who want to go to a university, that university should be able to charge a premium through a top-up fee to ensure that their facilities are first-class."

Referring to Lady Thatcher's comment that you can't buck the market, Professor Smithers says it's impossible to keep the same level of income from public (the Government) and private (student) sources when you have such a large higher education system. Pressures will inevitably build up.

"Oxbridge have a first-rate education," he says. "It is more expensive and they have been protected by getting college fees as well as the university fee. If people attempt to remove some of that money, they are powerful enough to begin saying, `We're greatly oversubscribed. Let's charge some kind of premium because essentially our courses are worth more than some of the other courses on offer elsewhere.' "

But, if universities are prevented from charging, it will have the curious effect that students from abroad will begin to fill up some of our best institutions because they pay full-cost fees, says Professor Smithers.

A few vice-chancellors and heads of Oxbridge colleges favour the idea of cutting British universities free and letting them charge what they need on the lines of American universities. One is Professor Sir Colin Campbell, Vice-Chancellor of Nottingham University. Top-up fees are nonsense because they are based on the assumption that universities want to admit "thick, rich kids", he says.

"We should charge Glasgow fees, Edinburgh fees or Nottingham fees. If we are allowed to do that, we will run better quality universities and have better courses than with civil servants in London telling us how to do it."

Sir Colin recommends that government ministers learn the lessons of America, which has a funding system that is infinitely superior to ours, he says. Liberal arts colleges such as Barnard and Ivy league universities such as Harvard and Columbia charge what they need, admit students according to ability and then work out a financial package - composed of loans, scholarships and jobs on campus - to help with the cost.

Alan Ryan, who taught at Princeton for eight years and is now Warden of New College, Oxford, and the new chairman of Oxford's Conference of Colleges, agrees. It is a mistake to fund universities on the basis that the cost of courses is uniform everywhere, he says. "Hefce funding is like the last days of Stalin's attempt to run a siege economy. Universities should be allowed to charge what they need and then the Government should subsidise the students."

At Oxford, heads of colleges are toying with the idea of replacing the college fee, if it is axed by the Government, with a charge to cover the lost money. But they are not calling it a top-up fee. That is because it would not be an extra item but a fee to compensate for possible loss of government funding. That way it would also be legally watertight, they believe.

The phrase "top-up fee" does not inspire much enthusiasm. Most experts, however, believe top-up fees are inevitable. Iain Crawford, visiting research associate at the London School of Economics, says that will happen unless the Government manages to classify money spent on loans so that it does not increase the public sector borrowing requirement. He says: "If you can fix the classification of loans you can keep top-up fees off the agenda for the next decade."