1 The context

Where we are

UCL: aerial view

In the years since the last Council White Paper, Modernising UCL, in 2007, UCL’s development and performance has been remarkable. It has become:

  • London’s global university, with an emphasis on global recruitment of staff and students, embedding global citizenship in our curricula and activities, global collaborative research and teaching initiatives and establishing a global footprint with offshore ventures;
  • a global leader in research as demonstrated in national and international metrics, league tables and other measures of comparative performance;
  • a global top-choice university for growing numbers of students, attracting increasing numbers of applications every year, particularly for postgraduate study and from overseas students;
  • a leading centre for innovation and interdisciplinarity, particularly through the Grand Challenges initiative and the establishment of new institutes and degree programmes;
  • a beacon for public engagement, recognised and supported nationally through the Higher Education Funding Council for England;
  • a leader in London, through the sponsorship of a new secondary school in Camden (the UCL Academy); engagement with the Olympics 2012 and the Olympics legacy beyond 2012; a founding partnership in The Francis Crick Institute (formerly known as the UK Centre for Medical Research and Innovation) at St Pancras; new institutional research collaborations within London and the South-East and as home to the Sainsbury Wellcome Centre for Neural Circuits and Behaviour, reinforcing London’s claim to be one of the world’s scientific capitals;
  • a global leader in combined medical and health research through UCL Partners, drawing together research and teaching in medicine with clinical care and population health, through partnership with four major London hospitals.

The Government’s transformation of undergraduate tuition fees

Through the post-War era until the 1990s, UK universities were funded by the Government to provide teaching, and did not charge tuition fees to undergraduate students. That changed in 1999 when a uniform fee of £1,000 a year was introduced. It was succeeded from 2006 by a system under which admission was free at the point of entry, but a contribution to the cost of higher education was required from students following graduation, as a 9% levy on earnings over £15,000. The maximum chargeable by a university is currently £3,330 a year.

The reforms that have now been introduced by the Coalition Government build on that model, but with dramatic changes. Government teaching grant to universities is to be cut. Some residual grant will support expensive subjects involving laboratory and clinical education, and certain other strategic and vulnerable subjects. But mainstream grant will go altogether, leaving no direct core grant support.

In its place, with effect from 2012, the maximum tuition fee a university may charge rises to £9,000 a year. Admission to a university remains free at the point of entry. The fee is met from a student loan, repayable from post-graduation earnings in the form effectively of a graduate tax set at a rate of 9% of earnings over £21,000. That means that a graduate earning £42,000 will be repaying at a rate of 4.5% of their total income.

The effect is that Government support shifts from the university to the student, and all graduates are treated equally after graduation, according to their actual income. There is concern that the scheme will act as a deterrent to students from going to university at all, particularly those from low-income backgrounds. Although such a fear in 2006 proved over the following years to be groundless (the proportion of young people living in the most disadvantaged areas who enter higher education has increased by around 30% over the past 5 years and by 50% over the past 15 years1), the tuition increase in 2012 is of a different order of magnitude.

UCL’s fee level

UCL students on the Portico

We decided in March 2011 that the UK-EU tuition fee for undergraduates entering UCL from 2012–13 onwards should be £9,000 a year. We did so on the basis that this was the amount necessary to replace the lost Government grant, to be able to provide bursaries for students from less well-off backgrounds and to achieve financial  sustainability. We recognised that sustainability would not be achieved simply by  setting this fee level, and that other economies outlined in this White Paper will also be essential. A lower fee level would have necessitated much more substantial reductions in costs, with a serious adverse impact on the quality of the student experience.

We did not favour setting different fees for different courses. Nor did we propose discounting or waiving fees. Because fees are not paid until after graduation, this practice has no immediate benefit to students and relies upon largely unfounded assumptions about future earning capacity.

The consequences

The new funding arrangements pose grave challenges to UCL. We anticipate that the new tuition fees will reinstate much of the foregone HEFCE teaching grant for undergraduate teaching, but will in turn generate an absolute requirement to make
transformative investments in the estate, teaching infrastructure and other aspects of the student experience.

In addition, we anticipate flat cash funding for research, a cut in the recovery of overheads on Research Council grants (a reduction of up to £6 million a year by 2012–15), and steadily rising energy costs, particularly for IT provision. There are
some limited opportunities to increase income through modest expansion of student numbers where these are not controlled by the Government. This presently includes postgraduates and international students, but we anticipate that the restriction on
UK-EU undergraduate student numbers will also be relaxed.

Yet several fundamental uncertainties remain, including:

  1. the extent of residual funding for UK-EU undergraduate programmes in HEFCE Bands A and B. These are the laboratory and clinical subjects that are central to provision of the science, technology, engineering and medicine (STEM) subjects. It remains likely that funding will be reduced in real terms from its present level;
  2. the extent of residual funding for other strategic and vulnerable subjects;
  3. the extent of residual funding for postgraduate taught programmes;
  4. the future of the current cap on UK-EU undergraduate student numbers. The Government proposes to lift the cap in respect of students with A levels of at least AAB or equivalent from 2012–13, and may lower the threshold further in future years;
  5. the funding of medical students, who presently pay fees for all years of their course, but this is offset in years 5 and 6 by an NHS bursary which is not guaranteed to rise to meet the cost of the new fees;
  6. the number of medical students. There may yet be a national cutback, which could be imposed equally across all medical schools. A quota of 7.5% is still imposed on international student participation;
  7. the potential knock-on impact for universities from proposed reforms to the National Health Service;
  8. potential reductions in HEFCE funding as a response to perceived over-pricing by the sector as a whole, and the impact on the student loan book and increased risk of default in loan repayment from higher fees. This could result in less money being channelled into research;
  9. the future of capital funding, where we face a reduction of over 60% in the annual HEFCE allocation with effect from 2012.

1 HEFCE 2010/03, Trends in young participation in higher education: core
results for England
, January 2010.

Next: Principles for a 10-year strategy