Source: Alamy

Red alert: funding for students at private colleges has risen from ?30?million in 2010 to an estimated ?1 billion this year

Labour could consider plans to cut the maximum fee that private colleges can charge to the public loans system from ?6,000 to ?3,000.

Meanwhile, a senior figure in the Liberal Democrats has indicated support for a graduate tax to fund higher education.

After a series of controversies over public-backed funding for students at private colleges ¨C which has soared from ?30 million in 2010 to an estimated ?1 billion this year under the coalition government ¨C a Labour government would be likely to toughen the rules.

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Some in the sector suggest that Labour wants to allow private providers with taught-degree awarding powers ¨C nine at present ¨C to remain at the ?6,000 cap on Student Loans Company fee funding. But the party could lower the cap to ?3,000 for all other private providers.

Labour could achieve that by setting the ¡°basic fee¡± at ?3,000, instead of its present ?6,000, when it lowers the cap. Such a move would also allow the Office for Fair Access, which requires universities charging above the basic fee of ?6,000 to provide ¡°access agreements¡± on how they will fund measures to help poorer students, to continue its work in the same way.

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Adrian Bailey, the Labour MP and chair of the Business, Innovation and Skills Committee, raised the issue of the private fee cap when he spoke at the ¡°Regulating ³ÉÈËVRÊÓƵ¡± conference, held at the London School of Economics on 24 March and co-hosted by the institution¡¯s Centre for Analysis of Risk and Regulation and the ³ÉÈËVRÊÓƵ Commission.

Mr Bailey said it had been brought to his attention that ¡°if in fact you have a lower range of ?3,000-?6,000, it would automatically remove a considerable element of funding from the private sector¡±. In such a scenario, he said, ¡°the financial burden of providing of loans to the private sector would be very much reduced¡±.

However, a Labour source said that lowering the fee cap for private providers is ¡°not our policy¡±.

Also speaking at the conference was Baroness Brinton, president of the Liberal Democrats, who said that ¡°if we¡¯re going to get round the fees and loans system, it¡¯s by changing Treasury rules, because that¡¯s the reason we¡¯re told we can¡¯t go to a graduate tax¡±. She said it was ¡°time we started a serious international debate about how we actually do that, because we¡¯re not the only country facing this problem. It¡¯s all about¡­EU students and about how the fees are repaid [once graduates leave the UK]¡­that¡¯s what I¡¯m being told by the Treasury¡±.

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Lady Brinton also stressed it was Lib Dem policy to hold a review of higher education in the next Parliament, and she was ¡°confident that it¡¯s going to be in our manifesto¡±.

David Willetts, the former universities and science minister, told the conference that there was a ¡°pressing¡± need for legislation on higher education regulation in the next Parliament. In the absence of such legislation ¡°sponsored by¡± the Department for Business, Innovation and Skills, ¡°the ³ÉÈËVRÊÓƵ Office becomes the regulator by default¡±, he added, referring to the regime for institutions¡¯ licences to recruit overseas students.

john.morgan@tesglobal.com