Malcolm McVicar: My university needs the money. But we cannot afford top-up fees

The Government risks deterring the very students it wants to attract

The good news in the debate about higher education tuition fees is that the Government recognises that English universities are underfunded and have been for decades and that this situation cannot be allowed to continue. In the context of the post-Thatcher legacy, the Government clearly feels unable to increase direct taxation to provide additional resources and has decided to lay this burden further on the students. Although many of us disagree, we do understand that it is the Government's call. However, there is the world of difference between an increase in the current means-tested, flat-rate fee and the introduction of differential fees.

The key question is whether an increase in fees of any kind will deter people from going to university. The honest answer is that we do not know - nobody has done the research. Some of us are doing that research now and there is some work on the impact of debt and debt aversion but, as far as I know, there is no substantial body of evidence on which the Government's proposals are based. Indeed, one of the major deficiencies of the policy is that in Whitehall and Downing Street there is actually little understanding of what modern higher education is like.

The policies appear to be based on the assumption that students are young, middle class, studying full-time honours degrees and geographically mobile. Many are, I guess the majority at the English Ivy League are, but at universities like mine - where a very large proportion of UK students are educated - the student body is diverse in age, ethnic origin, class, mode of attendance and so on. My great fear is that increasing fees will have a differential impact according to the gender, age, ethnic origin and income group of the student. Those most likely to be deterred will be the very groups which the Government claims it wants to encourage to participate. The assertion that an increase in (differential) fees will enable an expansion of access is truly Orwellian.

An increase in the current, means-tested, flat-rate fee would deliver reasonable additional resources for the universities. Combined with the shift to post-graduation, income-contingent re-payment of any fees, the re-introduction of limited grants and a zero real rate of interest, they would also protect the position of the poorer students and give us the chance to deliver on widening participation. So why has the Government resolutely set its face against this and gone for differential fees?

The argument is that different universities and different courses offer different long-term benefits, always expressed as earnings potential, and therefore the fees should be differentiated. However, the basis for fee differentiation is not to be future wealth, assuming that can be measured at the point of enrolment, but the market popularity of the "product". Thus, a degree course in physics may have low fees, because it is so difficult to recruit physics students, but a degree in law will have high fees.

The Government hopes that only those universities with the strongest market positions will be able to charge top-up fees and that a new regulatory framework will require some form of locally determined bursary to counter claims that the new system is élitist and will discourage participation. However, it is likely that most institutions will have little alternative but to charge the full fee.

What is the view from a mainstream, "new" university? Government clearly wishes to abdicate its responsibility for providing adequate funding for higher education. In those circumstances universities like mine, which have been most financially disadvantaged in the past, must find new money. We cannot afford not to charge a top-up fee. We too have staff whose salaries have been grossly eroded over the past 20 years. We too have crumbling infrastructure. We too have to provide the best service we can. However, there are some technical problems. Like many universities, we have a robust modular degree scheme which offers a range of choices to students. It is great that students can combine, say, engineering with law. But what do we charge? Engineering is expensive but unpopular. Law is relatively inexpensive and popular. Should we charge a price reflecting the popularity of individual modules? What do we do if the student changes the module mix during the course? Do we really want the price of a course to determine student choice?

Some have argued that universities like mine may need to charge top-up fees but will not be able to charge the full £3,000, and thus a market will emerge. Well, it now appears that as a condition of being allowed to charge top-up fees, universities will have to run their own bursary schemes, with an assumption that a third of any new income raised must be spent in this way. Some of the Russell Group - which comprises the leading research universities - were horrified that they might have to part-fund a national bursary scheme, so all talk of that has ceased. It will be down to us individually.

The laudable requirement to run a local bursary scheme makes it almost impossible not to charge the full £3,000. A university which charges the full fee will be able to award the maximum bursary to every eligible student. This will deliver cash when the student needs it most. It will, of course, need to be paid back, along with the rest of the £3,000. However, to charge less than the full £3,000 will disadvantage students with bursaries at the time when they need the most help. Then there is the tendency in the UK to equate price with quality. If a university does not charge the full fee, it will run the risk of being seen as a bargain basement provider. Actually, the quality assurance system in UK higher education is designed to assure that the quality of individual programmes is comparable across the range of providers. Under the recent Quality Assurance Agency grading system, excellence was not confined to one part of the sector - it was found in all providers irrespective of whether they were pre- or post-1992 institutions.

If a university feels little alternative but to impose the full top-up fee, the time to do it is 2006 - right from the start, when many others will be doing it and when the opprobrium can be directed at the Government. To wait until 2007 or 2008, perhaps to see what competitors are doing, is a high-risk strategy.

So, given all these negatives and the existence of an easier alternative, why is the Government so determined? The answer may lie in the zeal to reform the public services. The Government believes that there are too many higher education institutions, that many of them are inefficient. Rather than face the political fall-out which would come from direct intervention, it prefers to use market forces. At the same time as introducing the HE Bill, the Government is also proposing to weaken the criteria for the award of university title, which will lead to an increase in the number of universities both in the public and the private sectors. The assumption is that, in due course, increased competition will lead to a rationalisation of the sector.

The belief in the market is a powerful driver. Universities already have a wide variety of "businesses", some of which are unregulated, such as the recruitment of international students, and some of which are regulated, such as the provision of undergraduate education. I have always seen that provision as a public service. We are now at the beginning of a journey which will replace the concept of a public service with a free market - a journey towards the Americanisation of English higher education.

Dr Malcolm McVicar is vice-chancellor of the University of Central Lancashire. He is writing in a personal capacity