The man who proposed student tuition fees in the UK has given a warning that universities might be tempted into a form of price-fixing cartel.
Lord Dearing: Warning to government
Lord Dearing - author of a key 1997 report on higher education - predicted a new era of "price competition" between universities as a result of the government's new strategy.
Delivering the first lecture as president of the new Higher Education Policy Institute, Lord Dearing also said the new student grants should be higher - £1,500 not £1,000.
And there should be a 20-year limit on repaying graduate debts.
The government's recently-announced higher education strategy for England is to allow universities to charge higher tuition fees of up to £3,000 per year for different courses.
It reinforced the aim of having half of young people experiencing higher education by 2010.
That growth is expected to come not through traditional three-year degrees but through the new, two-year, vocationally-oriented foundation degrees - typically in further education colleges.
This has surprised some in the higher education sector, though it is the policy ministers have talked about for some time now.
And Lord Dearing said it fitted with the sort of expansion foreseen by his committee in 1997.
Potentially it could have a major influence on the structure of higher education.
This was especially so with the quadrupling to £880 per student of the "postcode premium" institutions get for taking people from less advantaged backgrounds.
He said FE colleges and universities that benefited most from that premium would be able to "advance their position in the marketplace".
He expected two reactions: more mergers and amalgamations - and pricing agreements.
"We are moving into a new world for institutions of price competition," he said.
"Pitching the price right is potentially very hazardous, especially in this desert of a growth market in the traditional degrees."
It would be natural for vice-chancellors to seek to protect themselves.
But in his day in private industry there had been an 11th commandment: "Thou shalt not fix prices with thy competitors or engage in unfair trading practices."
There was perhaps an issue that needed thinking through here - "it's a new one for us", he said.
It had been said that the Russell Group of 19 elite research-led universities would all go for the full £3,000 a year - "a thumping increase" on the current £1,100.
But some might not find it all that easy, he said. With FE colleges becoming big players at sub-degree level, there could be pressure on fees "all the way up the pecking order".
Grants and debt
In terms of the effect on widening access, Lord Dearing said the emphasis had been on universities - but society as a whole had to do more to see that people from less well off backgrounds got better exam results at school.
He thought the government was right to have proposed an "access regulator" to check that universities which wanted to charge higher fees had strategies for bringing in students from poorer backgrounds.
But he gave a warning that in reintroducing grants for the poorest, the government could create "a new underclass" of people from middle class backgrounds.
He argued that the £10,000 family income cut-off to qualify for the full grant was not enough - and that the grant should be £1,500 not £1,000.
Also, there should be a 20-year limit after which graduates should not longer be expected to continue paying off their debts.
The Education Secretary, Charles Clarke - who consulted Lord Dearing in preparing his strategy - has already indicated that the family income figure might have been pitched too low.
Lord Dearing also said it would be wrong if poorer people, anxious about debt, felt obliged to opt for the cheaper degree courses - typically in the arts - which in turn would mean a lower return in their postgraduate salaries.
Were higher fees "equitable"? Yes, because he believed the main beneficiaries of higher education were the students themselves, and having a degree would still yield "a financial dividend".
"We live in a society in which, in education terms, more is given to those that have and less to those that are less advantaged in life," he said.
"Ours in the educational stakes is a very unequal society, and those that have the gifts and background to equip themselves for higher education get a much better deal than the less academically gifted and less fortunate in what their parents can do for them."
Lord Dearing also broadly welcomed the government's plans on research and on teaching.