Vince Cable was accused last night of adopting desperate measures to head off a stampede by universities to charge the top rate £9,000 a year for courses.
In a speech to university vice-chancellors, the Business Secretary announced a string of policy moves aimed at persuading them not to go for the maximum fee. These included giving those universities offering cut-price courses the opportunity to increase student numbers. This is likely to include increasing student numbers at privately-run institutions.
Mr Cable also warned those charging the maximum that they faced having their student numbers cut in future if they could not fill courses and may not get them back. And he proposed tougher powers for the universities' watchdog, the Office for Fair Access (Offa), to refuse applications to charge the top rate.
In future, Offa is likely to be given powers to refuse permission to charge more than the £6,000 minimum fee if the university concerned has a high drop-out rate.
Mr Cable's remarks at the Higher Education Funding Council for England's conference in Birmingham brought an immediate attack from vice-chancellors and student leaders.
Paul Marshall, executive director of the 1994 group of universities – which includes top-ranking non-Russell Group universities such as Exeter and St Andrews – said: "It is important not to confuse value with price. Student numbers must follow the institutions that offer the best return on student investment, not those that simply come in at the lowest price."
Aaron Porter, president of the National Union of Students, added: "Vince Cable's speech today was attempting to fix one rushed policy by throwing around a series of... desperate initiatives, none of which stand up to examination."
So far around 30 institutions have released details of the fees they plan to charge – with two two-thirds opting for the maximum £9,000 fee.
However, Mr Cable said he had evidence that only 22 out of 46 institutions that had indicated their charges were opting for the maximum fee.
He added: "The biggest mistake a university could make is to underestimate its customers. Students will search for value for money and compare the offers of different universities."
Mr Cable said universities "not offering provision of recognisably good value but who pitch for higher prices could be seriously squeezed". "We would rather avoid institutional failure," he added.
On allowing those charging lower fees to expand student numbers, he said: "To reward the most competitive providers, we are considering whether we might modify student number limits on any institution that decides to charge lower amounts for its courses."
New research by the Office of National Statistics underlines the financial advantages gained by graduates through employment. On average graduates earned £12,000 a year more than non-graduates over the past decade (£30,000 rather than £18,000).
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