Vince Cable bears brunt of tuition fee anger

By Alison Kershaw, PA, Tuesday, 12 October 2010,

Vince Cable was under fire tonight over plans to charge students thousands of pounds more for university, as he scrapped a Liberal Democrat election pledge to oppose any rise in tuition fees.

The Business Secretary told the Commons ministers were considering a new tuition fee level of £7,000 per year – more than double the current £3,290.

He was responding to Lord Browne’s review of student funding which proposes the most radical shake-up of higher education funding for years.

The review called for the cap to be lifted, raising the prospect that institutions could charge as much as £12,000 a year for some courses.

Mr Cable told MPs that the Government is “considering this carefully”.

The future of tuition fees is a politically explosive issue for the Lib Dems, who campaigned against them in the general election.

Many Lib Dem MPs signed a National Union of Students (NUS) pledge to vote against any hike.

But when confronted today, Mr Cable admitted the pledge would have to be abandoned.

He said: “Let me just finally confront this issue of the pledge, the promise, which I and my colleagues undertook to implement.

“Under current economic circumstances we cannot implement that.”

He later added: “The roads to Westminster are covered with the skidmarks of political parties changing direction on this issue.”

The Lib Dems had accepted that their opposition to graduate contributions was “simply no longer feasible” in the current economic climate, Mr Cable said.

Lord Browne’s review calls for universities to be left to set their own fees, with the Government fully underwriting fees up to £6,000 a year.

Any university charging more than £6,000 would be hit with a tapered levy to cover the cost to Government of providing the students with finance, and will keep progressively less of the extra funding.

The repayment threshold would be lifted to £21,000 from the current £15,000, and graduates would pay back loans at a much higher rate of interest, equal to the Government’s cost of borrowing, which could leave them facing many years of debt.

Mr Cable said: “We do believe it is essential that if the graduate contribution is to rise, it should be linked to graduates’ ability to pay.”

A £21,000 repayment threshold would mean that “30% of graduates would pay less from their lifetime earnings than they do now”, he said.

“The top third of graduate earners would pay more than twice as much as the lowest third – that’s fair and it’s progressive and the Government broadly endorses this approach and will examine the details of implementation.”

But shadow business secretary John Denham asked Mr Cable: “Isn’t the truth that the coalition has decided to put the responsibility for reducing the deficit on to the personal banking accounts of this country’s most ambitious and able young people?”

He said that a fee increase to £7,000 a year would mean some students leaving university in debt to the tune of £44,000.

Many graduates could still be paying off their loans when their own children went to university, he claimed.

He went on: “What exactly is the difference between the £7,000 per year fees that the Deputy Prime Minister believes would be a disaster and the £7,000 a year fees that you now propose?”

A number of backbench Lib Dem MPs, including Greg Mulholland and John Leech, have already warned they will vote against any rise.

Mr Mulholland asked Mr Cable: “Do you accept that doubling fees to more than twice the level they are currently at is a compromise that some people cannot and will not accept?”

Mr Cable replied: “What we have got to work towards is a level, I specified £7,000 which we think is the only way in future that universities can be properly funded to carry out the functions which you and all of us want to see them perform at world-class level.”

He also refused to give reassurances that students will not be penalised for paying off loans early, saying: “I think we need to be very clear that we cannot have a system in which very affluent people are able to buy their way out of obligations of what is a fair graduate contribution system.”

The NUS warned that if adopted, Browne’s proposals would hand universities a “blank cheque” and lead to a market in higher education.

Sally Hunt, general secretary of the University and College Union, warned: “Lord Browne’s recommendations, if enacted, represent the final nail in the coffin for affordable higher education.”

The review proposes to simplify the living costs system, so every student is entitled to a flat-rate maintenance loan of £3,750.

It suggests that students taking out tuition fee loans of £6,000 and £3,750 in maintenance loans for three years will owe £30,000 by the time they graduate.

Lord Browne said that, under the proposals, the bottom 20% of earners will pay less than under the current system and only the top 40% of earners would pay back close to the full amount.

The 60-page document also calls for a 10% increase in student numbers over the next three years, with “no restrictions” on how many students institutions can admit.

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