The first semi-official report of the state of the Coalitions secret negotiations over student fees suggests David Cameron and Nick Clegg have been unable to tie up a deal and could now face defeat in a crunch vote in the House of Commons within weeks.
If the government loses the vote to raise the cap on student fees then the Coalition faces an authentic crisis that could trigger a new general election or force Nick Clegg into a do-or-die Clause 4 moment with his party. Universities face a “Valley of Death” that could tip some into bankruptcy.
Under a shroud of almost complete secrecy, intense negotiations between ministers and potential Liberal Democrat MP rebels have been running for two months in Westminster. Neither side has made any statement on the state of the talks. But on Friday Universities UK, which has been kept abreast of developments in the talks by ministers, lifted the lid in a confidential briefing to vice chancellors that suggests the two sides remain far apart and may be unable to reach a deal that allows the whips to guarantee Cameron a majority.
“With so much public attention focused on the issue there is a real risk that the Government will alter or abandon the proposals,” said the briefing, obtained by Research Fortnight.
The briefing says the focus of lobbying efforts in the run up to the vote should be the Lib Dem MPs who, it says “effectively hold the balance on the vote in the Commons”. And in its calculations of Commons arithmetic, the briefing assumes that Nick Clegg will be unable to whip even his ministers into supporting the government. Consequently, the government may face defeat in the Commons if 28 Lib Dems stick to their pre-election pledge and vote against the plans.
Such a defeat could be interpreted by Cameron as a violation by the Lib Dems of the Coalition Agreement and provide him with grounds to dissolve the agreement and call a general election. With the Lib Dems currently hovering around 10 per cent in the polls, an election could lead to a wipe out of the partys MPs. Fear of that could force Clegg to confront his party with a back-me-or-sack-me ultimatum.
Social liberals such as the former leader Charles Kennedy have been unmoved by Cleggs claim that the governments plans are a progressive improvement on the past. The social liberal wing was strengthened by the party elections last week that installed Tim Farron – who has promised to vote against the government if it attempts to lift the cap to £9,000 – as party president. Ministers failure to reach agreement with the rebels suggests they are playing hardball and holding out for further written concessions that would be seen as a humiliating U-turn for the government.
Ministers have committed themselves to a vote on the issue before Christmas and UUK says it has been told to expect it in the first two weeks of December. Importantly for the Commons arithmetic, the National Union of Students says it now has contact with a number of potential backbench Conservative rebels who think £9,000 is just too high and will alienate core middle class supporters. It says discontent surfaced at a meeting of the backbench 1922 Committee with David Willetts 10 days ago.
For universities, either abandonment or alteration of the governments plans could trigger a wave of bankruptcies. If the government abandons its attempt to raise the cap on student fees, then it has only two ugly choices. It can cut back severely on student numbers, sending a financial shockwave though higher education and probably tipping some universities into bankruptcy. This is the Valley of Death UUK has warned of. Or George Osborne can reallocate the government borrowing planned to finance student fees to university block grants. But because the planned borrowing for student fees was not included in the Treasurys forecast of goverment debt, this would have the effect of increasing the Treasurys announced figures for public borrowing by billions and dent Osbornes tough image on public spending.
The briefing does not say how the government might alter its plans. But the most politically toxic element is the level of the cap on fees, currently planned to rise to £9,000. Vince Cable has wobbled alarmingly over the level of the cap in recent weeks – being at one point on the verge of announcing a cap at £7,000 – and the nervous tone of the UUK briefing suggests he may be wobbling again.
Bringing the cap back down to £7,000 could ease backbench Conservative fears that £9,000 is too high, while making it easier for wavering Liberal Democrat MPs to abstain rather than vote against the plans. But it would be a huge defeat for Englands top research-intensive universities that know they could charge up to £20,000 a year in a truly free market.
The NUS alleged last week that the governments plans “do not add up” and the briefing sketches the huge questions still to be hammered out before the new policy is fully formed. UUK is pressing the government “to produce clear information on student numbers, funding for widening participation, funding for postgraduate teaching and health and teaching education, exceptional funding for specialist institutions and significantly greater transition funding”. Settling all these issues has been disrupted in recent days because the government cannot say whether the key civil servant overseeing the policy will be at his desk on Monday.