One of the most spectacular policy announcements of the recent general election campaign was Labour’s offer to scrap tuition fees for new students and abolish outstanding repayments for graduates. There was no attempt to link this to the NHS and social care funding crisis as the other great funding need. There was also no real vision for how this would sit alongside the need to remove the cap on public sector pay. However, it seems to have worked, like most much announcements, in this case attracting many young voters that would benefit from any removal of fees.
I notice that the Tory press has taken to blaming the Lib Dems for the present university student fee levels, this despite the fact that it was a decision of the coalition government, albeit taken by a Tory minister and presumably approved by both a Lib Dem Secretary of State and the Cabinet as a whole.
One of things that riled me at the time of the fee hike was the lack of any discussion on why classroom subjects should be assumed to cost the same as laboratory and practical subjects? I wonder if ministers thought the market would drive down prices but, as I have pointed out before, with demand far exceeding supply, there was no incentive for any university to anything other than tinker at the edges with the £9,000 fee levels.
So, are such fees justified for arts and humanities subjects? Well, much depends upon the size of the group and the number of hours taught. Fees at this level should allow for minority subjects cross-subsidised by more popular courses and lots of options within courses, even if only 25% of the fee income goes directly to teaching and the rest to legitimate university and departmental overheads. Of course the level of salary and the mix of experience of teaching staff also play a part, as they do in school finances. One cannot help feeling that universities are possibly also possibly funding future capital programmes and increasing their surplus funds from the fees being paid by current students. Both seem to me good reasons for re-assessing the balance between the price paid by students and the eventual cost to government.
I think university accounts should be much more transparent on how fee income is spent, especially between different types of course. Many years ago, I conducted research into the funding of teacher education courses and it was clear that at the £3,000 fee level universities that paid a fee to schools could not cover their costs and had them written off each year by the central administration. It would be interesting to repeat that exercise on the £9,000 fee level.
Personally, I think that there is a case for fees to be in the £6,000 range, to allow for funding of free nursery education that might be a casualty if fees were to be abolished, with a direct government top-up for specified STEM and other more expensive subjects that universities might need encouragement to develop. I certainly don’t want undergraduates subsidising either the summer conference trade or in most cases either research programmes or postgraduate taught courses.
John Howson 
At the £9K fee level, I think you would find that the total fee income is greater than the combined cost of salaries, money going to schools, and general revenue expenditure for the course, but certainly at research intensive universities once the share of the central expenditure on student services and facilities is taken into account, PGCEs are not run because they are financially attractive to the university. They just can’t manage with the kind of staff:student ratio that makes typical large UG courses in most subjects work out so well. It may be that at HEIs where ITE is a much larger part of their operation, that the costs work out differently, perhaps due to a different salary structure or less expensive central university operation – I don’t know. I do know that PGCEs across many RG and other universities are well-thought of by VCs but precarious on financial grounds.
Thanks for your helpful comment. I think your analysis is absolutely correct. The question is whether teaching courses such as PGCEs should contribute to central services they don’t use to any great degree? This is a matter for debate between the Education Unit, whatever its title, and the central administration. For instance are rooms priced on a per session basis or an annual overhead regardless of time used? PGCEs benefit from the former approach as students are in schools for two thirds of the course and the latter approach provides no discount for this to be offset against fee charged by schools. In 1996 I wrote in the Bines & Welton book on Partnership in ITE that when recruitment was challenging schools needed to think why they charged universities if by placing a good student the university saved the school significant recruitment costs on hiring a new teacher.
VCs have been prepared to write-off deficits because having a PGCE course was seen as a ‘good thing’. The He sector nearly lost this when Gove was driving the ITE agenda but I suspect there is now something of a re-assessment. Certainly, applicants seem to be favouring HE courses. I suspect the break even number for a subject on a PGCE is a group of 20/25 depending on the level of expertise among the staff.