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What would £6,000 fees mean for Scotland – and Wales and Northern Ireland?

February 27, 2015

Today’s confirmation that a Labour Government at Westminster would reduce the fee cap to £6,000 raises questions about the impact in other parts of the UK.  There’s also been an announcement that grants will rise by £400 – but as is normal, this is getting less coverage.

For Scotland, the big questions – and likely answers –  include:

Will the Scottish Government make a commitment to reducing the fees of rUK students? Surely, yes.  Nicola Sturgeon told an audience of students in London last year of her personal dislike of charging rUK students such high fees, and that the Scottish Government did so only as a necessary measure in the face of policy in England.  The 2013 White Paper on independence stated that high fees for rUK students would be looked at again if fee policy changed in England. [(Revised) clarification: the legislation allowing higher rUK fees simply deregulates these completely.]

What would the effect be on Scottish university income?  Clearly there would be a loss, but experienced very variably. [Update: Universities Scotland has now quantified this as £37 million.]

Would the Scottish Government make up the loss?  It would be hard for it not to, and it should have the cash to do so – see below.

Would Scotland get a positive Barnett consequential? It certainly should, having taken an earlier large hit on the Block when fees went up.  Whoever is doing the sums down south needs to remember about that.  Something around £250 million [on reflection: £200-£220m likely to be a better estimate]   might be expected from today’s announcement  – though it would take several years to build to that level [update: probably not, in fact, as Labour have said they will apply to fee cut to all those in the system from 2016].

Would the Scottish Government lose loan funding ?  It should, but that probably won’t matter, as it has more loan than it can use at the moment.  But that might make it harder to, say, pay for an increase Scotland’s relatively low loan repayment threshold.

Would rUK student numbers remain uncapped in Scotland?  It’s hard to see how, if they cease to be self-funding as now.

Would the Scottish Government consider reinstating free tuition for rUK students?  Probably not.  They  were charged £1,820 a year when the fee in England was around £3,500.  The Scottish Government might come under pressure to  cap the fee a bit below £6,000, however.

Might some of the consequential be used, at last, to sort out Scotland’s woeful system of student grants, and resulting regressive distribution of student debt – which could be transformed for around £100m?   Ah, well …  In recent years Scotland has been the only part of the UK to cut  grants,  as fees have been protected.  However, with big promises on childcare just this week and huge pressures on the Scottish NHS,  the temptation to continue propping up a large part of Scotland’s higher education system by – in effect – bearing down particularly heavily on the future earnings of low income students will no doubt continue to look pretty tempting to the Scottish Government.  The chances are that alternative plans will be made for this cash very quickly (are probably indeed being made now)  and the promises to increase grant and get rid of student loan, made back in 2006-07, will be confirmed as of historical interest only.  But it would be good to be proved wrong.

The grant rise in England is to be funded by a higher interest rate on loans for those earning over £42,000 – it will be interesting to see how it’s planned to turn that long-term gain into an immediate cash benefit. Andrew McGettigan as ever is working hard here to make sense of the maths relating to loans behind the announcement as a whole.

Many of the same questions apply for Wales, but there the situation is hugely complicated be the sheer scale of cross-border movement in both directions (implying a larger loss than in Scotland of institutional income from incoming students) and the Welsh Assembly’s portable fee grant (on which it would conversely make large savings).  If the lower fee leads to the (re)introduction of capping of places, that should also make things easier for Welsh universities, by reducing the competition from English universities for students.  It’s good thing they have a review of their higher education system already underway.

For Northern Ireland, this is pretty much straightforward good news.  It imports very few students, so its Barnett consequential should be a straightforward budget boost – which it badly needs.

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