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Either the coalition didn't do the numbers properly or its policy was designed to drag university access back to postwar levels
Most universities have announced their fees for 2012, and it hasn't worked out quite the way the government planned it: last December the coalition was anticipating blithely that the majority of institutions would charge £6,000, and only in "exceptional circumstances" would the full £9,000 be levied. All their calculations were based on average fees of £7,500. The University and College Union then said this was a bit optimistic, since even at conservative estimates most courses needed £7,000 to break even.
Unfortunately there was so much going on: students were kicking in windows and burning effigies of Nick Clegg. All the talk was of equality and social mobility and higher education as a social good. We were all too busy for actual maths. Now that the maths is in, and the average fees will be £8,678, this will leave the government with a shortfall (or, in their language, irresponsible deficit) of £450m by 2014. This, by the way, is based on the estimate that 30% of students will default on their loans, which is also a bit optimistic.
The university system was not suited to the clean, simple lines of an unfettered marketplace. There are numerous practical problems. First, that UCU estimate of £7k as a bare minimum was based on courses with no clinical requirement. More expensive courses can cost £15,000 – so given the cap, institutions have a choice between not providing expensive courses or cross-subsidising them with cheaper ones. It would be institutional suicide to charge the lowest fees you possibly could.
There's also the looming impact of Theresa May's promised 80,000 reduction in non-EU foreign students, who have always cross-subsidised UK undergraduates. So even if, as an institution, you were managing right now to educate students for less than £9,000, you couldn't bank on that continuing.
Furthermore, the expectation was that Million+ universities (newer institutions, many of which used to be polys) would charge the least, while the Russell group would charge most. But this ignores the financial history of these institutions. Established universities have property portfolios, research grants, endowments – capital to keep them afloat before they start milking students. The same is not true of newer universities, where students are the beginning and end of the funding stream.
There seems to have been an expectation of meekness from universities, where the newer ones, with very few students from Eton and with almost no celebrated drinking clubs, would charge less, mindful of their low status. Instead vice-chancellors have put their self-esteem aside and calculated how much they need to charge if they are to thrive.
Beyond these practical considerations there is the obvious problem that market forces work OK when they evolve, and they work lopsidedly – if at all – when they are introduced suddenly, especially to a field whose values are quite hard to monetise.
You can't run a university like a fruit and veg stall, trying to shave small percentages off teaching hours to be cheaper than the guy down the road. There is a lot riding on confidence and pride, and just as transparency in the FTSE 100 has forced bosses' salaries upwards as companies battle to create the impression of success, so transparency of fees has amounted to a race to the top. If you're not at the top, you declare yourself second rate, as the vice-chancellor of Teesside was the first openly to admit.
Vince Cable made the tetchy assertion this month that "the biggest mistake a university could make is to underestimate its consumers. Students will search for value for money and compare the offers of different universities." This is plainly incorrect: a bigger mistake would be for a university to underestimate itself, which everybody realised immediately – and sure enough, as students do compare offers, they all turn out to be roughly the same. It's weird that Cable, being business secretary, did not see that coming.
He also should have seen coming the dissonance between what the government is saying to universities – keep it lean, keep it competitive – and what they've been saying to students: this is toy money. Don't even think of it as money, think of it as a loan on such preferable terms that it would be a shame not to take it. They can't have it both ways. If students do think carefully about value for money, many of them will be forced out of higher education as they struggle to see a clear pay-off for a humanities degree. If they don't think about value for money, there is less incentive still for the universities to try to keep their prices down.
Even if some universities did turn out to be demonstrably bad value and were undercut by an emergent private sector, you would still be left with the fact that education is not a straightforward commodity. There is supply, there is demand, but the suppliers have demands of their own, and they choose you as much as you choose them.
It's another one of those coalition head-scratchers: is it possible that it didn't occur to them how unlikely it was that universities would shuffle neatly into a sliding scale, based on how much less good than Cambridge they thought they were? Or was it always the intention for the policy to be a disaster? Are we looking at some nefarious long game, in which access to education is rolled back to postwar levels, with no deliberate government measures, just a series of regrettable, unforeseen events?