Policy Papers


University fees in historical perspective

Robert Anderson |

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Executive Summary

  • Since 2010 the state’s teaching grant to universities has been converted into income-contingent loans designed to drive the university system through choice and competition. This paper shows how this has come about, and puts it in a longer-term perspective.
  • State support for universities has a longer history than is often supposed, and allowed student fees to be kept low. Even before 1914, outside Oxford and Cambridge, fees usually only made up well below half of university income. Making students pay the full cost of their education is a radical innovation.
  • Free higher education dates from 1962, and was part of the expansion associated with the Robbins report. From the 1960s to the 1980s it coexisted with the funding regime of the University Grants Committee, which supported university autonomy and traditional academic values. The historical context explains why this equilibrium became unsustainable, and underlines the contrast with present policies.
  • Policies based on marketisation look to American models, but British universities developed on more European lines as an integrated national system in association with the state. Its history has made it hierarchical, with significant distinctions of social and intellectual prestige. While free higher education mitigated these divisions, a fee-driven system is likely to exacerbate them.
  • The adoption of a full-fee regime opens the way to private providers of higher education, and this too is a radical break with past practice. 
  • The restoration of free higher education in England may be politically impracticable, but a combination of lower fees along with more core state funding would provide a better balance of interests than the present ideologically-driven policy, and one with its roots in historical precedent.    

Introduction

Between 1962 and the 1990s higher education in Britain was effectively free, as the state paid students’ tuition fees and also offered maintenance grants to many. In 1998 university fees were reintroduced at £1000 per year. In 2004 they were raised to £3000, now converted into loans repayable on an income-contingent basis, but still regarded as ‘top-up’ fees supplementing the state’s direct grants to universities. Following the 2010 election, the basis of university finance was radically transformed, as student fees, now raised to £9000, largely replaced the teaching element in the state grants. This policy applies in England, but in Scotland free higher education has become a flagship policy of the Scottish National Party. The Scottish experience, and the collapse in Liberal Democrat support after the party’s acceptance of fees as the price of coalition, suggest that free higher education still has electoral appeal, when backed by a firm political will. But in England it seems unlikely that the policy will soon be reversed. Indeed, the Chancellor is abolishing maintenance grants for lower income students from 2016, reducing still further state support for higher education. It is the product of a tide of marketisation which has flowed in one direction since the 1980s, and it is unlikely that any government seeking to mitigate the impact of ‘austerity’ will give priority to abolishing university fees over issues which arouse more passionate popular engagement like the National Health Service, schools, or welfare. Even in Scotland, the fiscal sustainability of the no-fees policy is questionable, and it has been paid for by cuts elsewhere, including student maintenance grants and further education.

Conservative university policy, as expressed in the White Paper of 2011 (Students at the heart of the system) and the Green Paper of 2015 (Teaching excellence, social mobility and student choice), is based on clear general principles of choice and competition. But opposition to it often focuses simply on student fees. This is understandable, given their direct impact on students and their families, but fails to address broader issues about how universities are financed and what their relationship with the state should be. Here historians can make a contribution to the debate. History can explain how free higher education came about, and the stages by which it has been eroded. It can put university finance in a longer perspective, reaching back into the 19th century. Historical perspectives are also comparative ones, as national systems have evolved according to their own traditions. There is a broad contrast between continental Europe, where the state has generally controlled and financed universities, and the United States, where they have developed on mixed private and public lines. Britain falls somewhere between. The state played a larger part in university history in the past than is often supposed, and British universities were knitted over the years into a single national system, though one with a clear hierarchy of prestige. This is very relevant to how the marketisation of universities through the fee system may work out in the future.

Reform in the 19th century

There were practical reasons why Oxford and Cambridge, the only English universities until around 1830, did not need state aid. They had rich endowments, mainly in the form of land, and a wealthy clientele which could pay high fees. The laissez-faire principles of Victorian Britain meant that political opinion was broadly hostile to state intervention. Thus, when university colleges were founded in London around 1830, they got no state subsidy. However, it was a different picture in Scotland. Scottish universities were not free (though this is sometimes claimed, wrongly, as an ancient tradition), but fees and living expenses were low, and there were state grants, mainly in the form of professorial salaries, which were supplemented from student fees. University education was accessible to a wide social spectrum, and Scottish intellectuals consistently argued that the democratic character of the universities justified state support; they often pointed to continental models, especially Germany.

State grants before 1914

Between the 1850s and the 1880s, both the Scottish universities and Oxbridge underwent far-reaching reform imposed by Parliament. Their role in the education of the national elite was too important to escape political attention. The Scottish universities received expanded funding. Oxford and Cambridge were still able to survive on their endowments, but reformers held that these were a public trust, not private property, and needed to be unlocked to serve new purposes. Meanwhile new ‘civic’ university colleges were founded in the English provinces, particularly the industrial north and midlands. They arose from local initiative, and at first received no state aid. But their support from local industries and businesses was very patchy, and none had a secure endowment. They depended on fees, public appeals, and a constant search for donations. It soon became clear that the English university colleges (including the old-established ones in London) met a real social and economic need, but were held back by poverty. From 1889 they received a Treasury grant, initially of £15,000, shared between institutions. In Wales, there had been a similar grant since 1882.

Why had opinion come round to the idea of state subsidy? Partly because of a general shift of opinion towards a more positive role for the state, and more specifically because of fears that Britain was being outclassed industrially by other nations, especially Germany. A strong lobby pressed for more to be spent on scientific and technical education, and the civic colleges were favoured because they taught practical subjects and had links with local industries. Most of their students came from relatively modest social backgrounds, and would be unable to pay high fees.

SOURCES OF UNIVERSITY INCOME (%)

Figure 1: SOURCES OF UNIVERSITY INCOME (%)

The Treasury grant increased periodically, and by 1911 was about £150,000 in England and Wales, where significant income also came from county and city authorities. The accompanying bar chart shows the percentage of their income which universities received from various sources. ‘England’ refers to the 15 universities and colleges, including five in London, which received Treasury grants in 1910. (Oxford and Cambridge, which accounted for about 40% of all English students, are excluded because they still received no state aid.) There were considerable variations. Sheffield, for example, received 28% of its income from central and 36% from local grants, and only 19% from fees. In London, University College and King’s College derived 49% and 56% respectively from fees; but the London School of Economics, though founded privately in 1895, got only 32% from fees, 24% from the state, and 32% from local grants – London County Council was a major funder of higher education.

The chart shows that the Scottish universities  were the most dependent on student fees (46% overall, ranging from 23% at St Andrews to 51% at Glasgow), and the three Welsh colleges were the most dependent on public grants (state 54%, local 6%). Throughout Great Britain, fees hardly ever exceeded half of university income; more commonly they accounted for between a quarter and a third. Since the bulk of university expenditure was on teaching, these figures represent the proportion of the true cost of their education paid by students. By 1914 the viability of the British university system, outside the elite-patronised Oxbridge, already depended on public financial support. 

The University Grants Committee and the interwar years

Between 1919 and 1939, state spending on universities doubled (from one to two million pounds), but the balance of funding established before 1914 hardly changed, as the bar chart shows. In 1938-9, 30% of income came from fees, 36% from central grants. The extent of state aid before 1914 is worth stressing because it is often supposed that this only began with the creation of the University Grants Committee in 1919. The UGC was initially a pragmatic arrangement bringing together existing state grants under a single body, and acting as a ‘buffer’ between the Treasury and the universities. Its members were academics sympathetic to university values, and they allowed the universities a high degree of autonomy, giving them ‘block grants’ to spend without detailed control. The UGC held a conservative ideal of university education, and severely restricted new admissions to the grant list, which from 1923 included Oxford and Cambridge. UGC grants normally covered only current expenditure, and universities had to seek extra funding, often from charitable trusts and wealthy philanthropists, for new buildings, professorships, equipment, and student facilities.

After the UGC’s abolition in 1989, its regime was looked back to as a golden age. But long before that, it was widely admired externally as a uniquely British solution to the problem of balancing academic freedom with public accountability. This helps to explain why, in a form of institutional amnesia, the extent of state aid before 1919 has been forgotten: it suited the universities to associate its beginnings with the creation of a body which respected their independence and embedded their autonomy institutionally.

A further 20th-century development was the expansion of public aid to students. There had always been college scholarships at Oxford and Cambridge, and bursaries for poor students in Scotland, and from the 1880s local authorities also offered university scholarships. Nationally, ‘equality of opportunity’ through education was adopted as a political aspiration well before 1914. The channels of opportunity were still very narrow, but they expanded with new schools legislation in 1918, and in 1920 national ‘state scholarships’ were created in England and Wales – though at first there were only 200 of them. Grants for prospective schoolteachers were another important form of state assistance, though in return students had to pledge themselves to a period working in schools. Surveys in the 1930s found that about half of all university students received public support of some kind. Since awards usually included fees as well as living expenses (‘maintenance’), this benefited the universities’ finances directly as well as widening the recruitment pool.

The abolition of fees and the Robbins Report

As in other European countries (though a generation after the United States), the years after 1945 saw a shift from elite towards mass higher education. The Second World War, even more than the First, underlined the importance of science, national planning and social welfare, and gave a strong impulse to the democratisation of education. The Cold War and international economic competition reinforced these trends. The state now became the main source of university funds, and this came to seem both natural and irreversible. Expansion of student numbers began as soon as the war ended, and the UGC’s role was extended to include national policy planning. Post-war expansion is popularly associated with the Robbins report of 1963, but though the report was vital in creating a political consensus which lasted for a generation, it only endorsed what was already happening. It was the UGC, not the Robbins committee, which planned the eight campus or ‘plateglass’ universities of the 1960s – the first, Sussex, opened in 1961. Unlike the earlier civic universities, or the dozen less glamorous technical colleges which were given university status in the 1960s, these were not based on existing local colleges, and depended on state finance from the start.

Free higher education also predated Robbins, being introduced in 1962 following the report of the Anderson committee. This was intended to simplify what had become a jungle of grants and scholarships, and had two aspects. First, though fees were not formally abolished, full-time domestic students now had them paid by the state. Second, students were entitled to a maintenance grant, whether at their local university or away from home. The maintenance grants were means tested (dependent on parental income), as were fee grants until 1977, but both were outright payments, not loans. Provided parents paid their share (if any), students were free of financial burdens. The Robbins committee took these changes as given. They were seen as a logical extension of free secondary schooling, introduced in England and Wales in 1944. It is often forgotten that the Robbins report preceded the introduction of comprehensive education. It therefore assumed the continuation of grammar schools, which allowed only 20-25% of children to enter a university entry path. Post-Robbins expansion raised the proportion of the age-group receiving any form of higher education from 7% in 1962 (4% for universities alone) to about 13% in 1980. But when student demand subsequently grew far beyond what was envisaged in the 1960s, the state’s commitment to free higher education made university finance a contentious political question.

Without something like the changes made in 1962, expansion beyond a limited social base would have been impossible. Most European countries met the same demand by abolishing fees or keeping them at a nominal level, but the British model was uniquely expensive. One of the basic ideas of Robbins was that students in new and expanded universities should enjoy the same standards of teaching as in the older ones: a staff/student ratio of one to eight was considered the optimum, and was largely maintained until the 1980s. Furthermore, the prestige of the residential model, as shown by the campus universities, meant that universities not only had to pay for a great expansion of university staff, and for expensive laboratories and libraries, but also for student accommodation and social, welfare and sporting facilities. As many critics have pointed out, this was a luxury version of the mass university, reflecting the image and prestige of Oxford and Cambridge.

From the 1960s to the 1980s

In the ‘Robbins era’ a political culture of social democracy and high public expenditure coexisted with the traditions of university autonomy established by the UGC. Despite new foundations, universities could still be seen as a single national system committed to common values and fundable on a uniform basis. Although universities are not usually seen as part of the ‘welfare state’, equality of opportunity was interpreted to mean that higher education should be a right, deriving from common citizenship, for all qualified to benefit from it (the ‘Robbins principle’). It was not a universal benefit, but paying for it from general taxation seemed acceptable if universities recruited strictly on merit. They were obliged to adopt admission procedures, organised nationally from 1961 by what is now the Universities and Colleges Admissions Service (UCAS), which treated all students equally, and even the most prestigious universities were open to all. The best higher education could no longer be bought by the rich, and ‘needs blind admission’ – sometimes cited as a virtue of American universities, though only the richest can afford it – was the rule throughout the system. Free higher education was seen as a long-term investment in human and intellectual capital, and those who benefited from it would expect to pay through progressive taxation for its extension to future generations. All this was seen as a permanent social achievement. Thus, the recent erosion of free higher education has had a symbolic and emotional impact as it seems to reverse the tide of progress.

The relative conservatism of the UGC, and universities’ freedom in using the block grant, prolonged the life of a university model established internationally since the early 19th century. Institutional autonomy, whether from churches, the state, or the market, was seen as essential to the university’s intellectual mission. Academic freedom guaranteed the right of science and learning to develop without external direction. In this traditional ‘idea of the university’, teaching and research should go together, enriching each other – whereas the recent tendency is to divide them between separate funding streams. In the romanticised ideal of a ‘community of scholars and students’ the two were partners in the common pursuit of truth. Seeing students as consumers whose choices and demands drive teaching fails to capture the input from students required by university-level teaching, its complex relationship with scientific advance and  critical inquiry, or universities’ socially important credentialling function. It is issues of this kind, rather than simple conservatism or the defence of professional self-interest, which have made the academic world resistant to so many aspects of recent policy, along with an ethos which sees higher education as a public good and values collegiality and cooperation above competition. But were these traditions only historic attributes of the elite university whose day is now past, or do they remain valid in the age of mass higher education?

From state to market

The equilibrium and consensus of the Robbins era did not last. Post-war expansion meant that even before Robbins about 70% of universities’ income came from the UGC; if other state funds were counted – via research or student support – the figure was 90%. This held dangers for the universities, which relaxed their fundraising efforts and neglected their links with local communities. Dependence on state funding made them vulnerable to periodic economic crises and the resulting attempts of governments to cut public expenditure. A first crisis of this kind came in 1973, a more serious one in 1981. Following the advent to power of Margaret Thatcher, this became more than a matter of cuts, as market ideology and the imperative of lower taxes became political orthodoxy.     

In the 1980s the block grant to universities survived, but came under increasing pressure, and governments urged universities to raise more money independently and to run themselves on more businesslike lines. From 1985, in a pilot exercise which became permanent, the teaching and research elements in the grant were separated, allowing selective funding in favour of universities with strong research. The desire for more direct state intervention led to the demise of the UGC in 1989, and its replacement by separate funding councils for England, Scotland and Wales that were more responsive to government policy.

In the 1990s the old consensus finally broke down, for practical as well as ideological reasons. First, demand for university education, which had been expected to stabilise, again took off. Second, in 1992 a Conservative government gave full university status to the polytechnics and other colleges which had formed a ‘public’ sector of higher education since the 1960s. This removed the last survivals of local authority governance and finance which had once counterweighed centralisation, while creating an expanded system whose diversity made it difficult to identify common missions and values. Pressure now arose for student finance to be converted from outright grants to loans. By stages in the 1990s, maintenance grants were turned into loans, with some outright payments retained for poorer students (until abolished in 2015). As taking a maintenance loan was optional, this was relatively uncontroversial. Restoring fees in the form of loans was a different matter: a proposal in 1984 was hastily withdrawn after a Conservative backbench rebellion – a reminder that free higher education was a prized middle-class benefit. The issue was postponed by appointing the Dearing inquiry, reporting in 1997, which proposed a set of new options for student funding.

It was Tony Blair who grasped this nettle, introducing a universal fee, paid ‘upfront’ not as a loan, of £1000 a year. In 2004, fees were raised to a maximum of £3000 a year, but now as an income-contingent loan. These were still called ‘top up’ fees, intended to supplement, not replace, core funding by the state. Blair believed that the expansion of higher education had run far ahead of economic growth. To maintain the quality of British universities, either more taxes must be spent on them, which lacked popular appeal, or there must be other sources of finance, including a student contribution justified by the higher earning power of graduates. The 2004 proposals were forced through Parliament despite strong opposition, and in the 2005 election the Conservative manifesto promised to abolish Blair’s fees (a fact now conveniently forgotten). Meanwhile, power over universities was devolved to the new legislatures in Wales and Scotland set up in 1999. After various intermediate solutions, fees were abolished entirely in Scotland for Scottish students (so university education is again free for students), while Wales and Northern Ireland retained a combination of tuition fee loans (currently £3800) and direct funding.

When the Conservatives became leaders of the Coalition government in 2010, they adopted a more radical policy for England. The ‘top-up’ idea was abandoned, and fees were raised to a level, up to £9000 a year, intended to cover the whole cost of teaching, and to replace the teaching element in the state grant. The choices made by students now conceived of as customers exercising choice in paying for a product in a market – and no longer as citizens exercising a social right - were intended to drive the development of the system, reshaping it through competition between institutions.

Conclusions

There are many practical and ideological arguments both for and against current policies. But a historical perspective underlines their radicalism. They are not a simple development of previous Labour initiatives, or a return to some past utopia of private finance. The current policy in England that fees should cover the whole cost of teaching has no real historical precedent, for students have seldom paid the true cost of their education. Moreover, both before 1914 and under the UGC regime until 1989, state funding was only given to universities or colleges which met stringent conditions of quality, under public or charitable governance. Universities were not directly controlled by the state, but nevertheless belonged to the public realm. By decoupling the payment of fees from the subsidy of individual universities, and making them cover the full cost of provision, the field has been made attractive to for-profit organisations. The intention, pushed further in the 2015 Green Paper, is to encourage new ‘providers’ offering cheapness and flexibility. But in the eyes of critics it is part of a wider neoliberal programme of opening public services to globalised corporations, paving the way for general privatisation.

English politicians in the Conservative government look for inspiration above all to the United States, rather than to other parts of Europe, or indeed of the United Kingdom. Some European countries retain free higher education, and elsewhere fees are far lower than in England, while Germany has abandoned an experiment with charging fees after popular opposition. The American model itself is more complex than champions of marketisation claim. According to OECD figures, public expenditure on higher education in the USA is both a higher proportion of all public expenditure (3.3%) and a higher proportion of GDP (1.4%) than in Britain, where the corresponding figures, below the average for advanced countries, are 2% and 1%. The top-ranking private universities in America are only part of a diverse and flexible system, spread over fifty states, with very unequal standards. While spiralling tuition fees at top universities are making them unaffordable for ordinary middle-class families, the national average is below England’s £9,000.

British universities have developed into a single national system, through the addition of successive layers – civic universities, plateglass universities, the technical universities of the 1960s, the new universities of 1992. In the resulting hierarchy, universities were unequal in intellectual and social prestige, but in principle equally accessible. State funding was a guarantor of fairness. But markets in education, left to themselves, will reproduce inequalities of wealth and social capital. This is reinforced by the unique pattern of secondary schooling in England, with its privileged private sector. If the present cap of £9000 is abolished, following the Green Paper proposal that universities which demonstrate ‘teaching excellence’ will be allowed to raise their fees, student choice (illusory anyway when so many universities are highly selective) is likely to lead to new divisions. Teaching reputations, social prestige and research funding already cluster around the 24 universities of the ‘Russell Group’, whose attraction for students and employers is very apparent in public discussion of university entry and graduate employment. They risk becoming the universities of the rich and socially privileged, leaving second-rank universities for everyone else.

The relation of British universities to the state has a long history; student fees have been part of the mix, but higher education has never previously been abandoned to the market as in England today. Modern states elsewhere support universities because their benefits are social as well as individual, and they have been the creators of individual opportunity, social solidarity, and national identity. The state is unlikely to abandon its interest in them. The combination of core funding and top-up fees introduced by the former Labour government, and adopted in modified form in Wales and Northern Ireland, creates a better balance between student interests, public accountability, academic freedom and democratic access than current entirely unprecedented policies pursued in England which are driven by a market dogma, which should not be allowed to monopolise the debate.

Further Reading


This paper draws on recent work by Robert Anderson: British universities past and present (Hambledon Continuum, 2006); 'The state and university finance in modern Scotland', Scottish Affairs, no. 85 (Autumn 2013), 29-41; and ‘Il finanziamento delle università britanniche in una prospettiva storica’, Memoria e Ricerca, 48 (2015), 11-33.

Robert Anderson, The ‘Idea of a University’ today, History and Policy Policy Paper, 2010.

Stefan Collini, What are universities for? (Penguin, 2012).

Carol Dyhouse, ‘Going to university in England between the wars: access and funding’, History of Education, 31, 2002: 1-14.

Carol Dyhouse, Going to university: funding, costs, benefits, History and Policy Policy Paper, 2007.

Nicholas Hillman, ‘From grants for all to loans for all: undergraduate finance from the implementation of the Anderson report (1962) to the implementation of the Browne report (2012)’, Contemporary British History, 27, 2013: 249-70.

Howard Hotson, ‘Germany’s great tuition fees U-turn’, Times Higher Education, 13 February 2014.

Michael Shattock, Making policy in British higher education, 1945-2011 (Open University Press, 2012).

Keith Vernon, Universities and the state in England, 1850-1939  (RoutledgeFalmer, 2004).

David Willetts, Robbins revisited. Bigger and better higher education (Social Market Foundation, 2013).

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