Paying the university bills

Today's report from the Public Accounts Committee simply confirms a picture that had become increasingly apparent in the calculations surrounding the Government's new higher education fees and loans regime. They got their sums wrong. And, as I have argued before, they need to do a number of things to extricate themselves from their arithmetical error.

First, they should revisit the balance between teaching grants and fee income. If it is the case that it is costing as much to subsidise loans for fees on some courses as if a higher teaching grant were paid, there should be a rebalancing as part of a deal with universities on fees for lower cost courses. It is an odd sense of priorities that the state subsidises students' drinking budgets away from home but declines to pay a penny towards the costs of teaching them.

Second, they should look again at how the UK is being sold to overseas students. Their clampdown on bogus visas is being confused abroad with a clampdown on legitimate students. UK universities and colleges need the income from overseas students to keep fees lower for domestic students. No 10 should take ownership of the visa policy and not allow it to be dictated by zealots in the Home Office who do not have Britain's best economic interests at the forefront of their priorities.

Third, they should ensure that competition is genuinely allowed to thrive in higher education. Not of the £18,000 a year Oxbridge-by-Thames celebrity gimmick kind, but strong FE degree courses and good value for money private degree colleges fully accredited. The forthcoming White Paper needs to ensure a genuinely level playing field and stop universities intimidating FE colleges from charging less for degrees. There should be real encouragement for two year courses (minus the endless holidays) and packages that enable students to study close to home.

And finally, instead of the Government subsidising loans above £6000 fees automatically, universities that wish to charge more should have to provide the loans themselves and pool the risk. Such a scheme would force universities to think more carefully about the balance of fees and loans, something they have no need to consider at the moment.

The Government has blundered its way through its higher education reforms to date (a common coalition affliction) but it has the chance to recover if it looks again at the balance of risks and income. Failure to do so could cause a major crisis in higher education funding when the new regime starts in earnest.