18,000 fewer students in Sheffield? Anything’s possible in a free market

Theres an eyewatering forecast this morning that the rise in tuition fees will prompt more students to stay at home and lead to huge falls in the number of students going to some universities.

The city of Sheffield is forecast to lose 18,000 students over the coming decade, Manchester 16,000, Newcastle 15,000 and Nottingham 13,000.

Im still waiting for a copy of the full report done for the Liverpool Victoria insurance firm, but the press release and abridged report will be enough to disturb both vice-chancellors and councillors in the cities concerned.

Certainly the basic idea that more students will live at home to cut the cost of getting a degree seems to me sound. And the report says demographics suggest an 8 per cent fall in the number of student-age people over the next 10 years, which could increase the severity of the downturn for badly hit cities and means that even places that do relatively well, like London, will see little increase in actual student numbers.

I have no idea whether the LV= forecasts are realistic – the reports authors and methodology are obscure. But it has been widely picked up in the newspapers today and in principle we should not be surprised to see changes like this (if perhaps not on this scale).

Universities have long been an instrument for rectifying economic imbalances within the UK. Decades before Whitehall starting decamping and the BBC was forced to move studios out of London, governments were siting universities in areas of economic decline.

But thats an advantage of a planned system. In a free market, all of that can go out the window.

Politically, ministers have made no attempt to prepare the ground for this kind of change. Did Nick Clegg tell his Sheffield constituents that this was on the way? This would be such a reverse of so many Coalition promises to rebalance the economy away from the south east that ministers probably have no choice but to ignore it/rubbish it/say it may never happen.

I do not think universities, councils or indeed voters in the cities concerned are remotely ready to accept decline on anything like this scale, on anything like this timetable. If these kinds of figures become accepted as realistic, then this is yet another tuition fees backlash in the making for the Coalition.

What this fails to take account of is how the universities concerned could react to the new pressure. A market-based analysis could argue that these universities are overcharging and need to take advantage of what should be a lower costs base (compared to London, say). That would point to a squeeze on academic salaries in many areas outside London, Oxford and Cambridge – which I imagine would be popular with ministers.

Updated at 17:20

LV= forecast of areas facing the greatest decline in students 2010-2020