Bahram Bekhradnia: Why a national bursary scheme makes sense

Next year the Government plans to look at the experience of the top-up fee regime introduced in 2006 by Tony Blair. It is essential that this is a proper review – although the impending election makes that difficult. The review was originally promised as part of a package to see off the rebels as the legislation was going through Parliament, in particular whether the introduction of fees had deterred participation by underprivileged groups. The indications so far are that it has not, but that is something that needs to be evaluated.

The other main issue for review is whether there is a case for increasing the maximum fee that universities may charge, and by how much, and what support can be provided to students who pay a higher fee. An earlier HEPI report looked at that and showed the difficult consequences of raising the £3,000 cap.

Because the loan that students receive for the fee is so heavily subsidised, either public expenditure would have to rise substantially or the cost to some graduates paying back their loans would rise. Those are unavoidable facts, and there will be no avoiding them. It is understandable, perhaps, but unfortunate that neither the Government nor the Conservatives appear willing to get to grips with these issues – indeed the Conservatives make a virtue of having "no policy", which is not a responsible position for a party that aspires to government.

In earlier reports HEPI has described the present arrangements for university financing and student fees as among the most progressive in the world. And so they are. With education free at the point of use and graduates repaying their loans gradually and as and when they can afford it, this is indeed a progressive and imaginative way of implementing the principle that those who benefit from higher education should contribute more to the cost of that education than those who do not (a graduate tax might be a more straightforward way of implementing the same principle, but there would be no way of ensuring the money benefited universities).

However, a HEPI report out today points out that there is one aspect of the present arrangements that is sub-optimal – and indeed in some respects is positively damaging. The Government and the Office for Fair Access require universities to offer bursaries to students from poor backgrounds to make university more affordable, and to ensure that they are not deterred for financial reasons from attending those with more demanding entry requirements. The result has been a huge range of bursaries offered by different universities, with different values and different criteria. In itself there may be nothing wrong with this. But the present arrangements give rise to two problems. First the levels of bursaries and who gets them have nothing to do with students' needs – students with the same need at different universities can receive differing amounts: these matters are decided not according to the needs of students but according to the strategies and the resources of institutions.

Second, the present arrangements mean that it is those very universities with the most poor students that can afford to pay the least generous bursaries. This is illustrated by the fact that the average bursary in Russell Group (research intensive) universities is £1,764 but in Million+ universities (former polytechnics) is £714. So, because they receive the smallest bursaries, those poor students at universities with most other poor students will be more dependent on term-time working to make ends meet than their peers at the less socially-inclusive universities, and it is well known that the more paid employment students do, the lower their prospects of academic success. So, social disadvantage leads to academic disadvantage.

It is not as if this policy is contributing to the Government's widening of participation – there is no evidence at all that these differential bursaries are encouraging young people to participate in higher education who would not otherwise have done so.

Nor does it contribute to the Government's desire for wider access to the most academically selective universities – the proportion of poorer students admitted by these universities is virtually unchanged since before the introduction of bursaries, despite the £100m spent on bursaries this year. Bursaries are not a good way of spending money in pursuit of widened participation and fair access.

HEPI has proposed a more rational way of making university more affordable for poor students: use a small part of the fee income received by all universities to pay into a national pot from which eligible students would receive a bursary that is related to their needs. This would relate the support that students receive to their needs, and it would resolve the unfairness to both students and universities of the present arrangements, but it would still leave universities able to provide top-up bursaries to pursue their own strategic interests.

The writer is director of the Higher Education Policy Institute