Can't resist blogging about this, even though as far as I can see the story is based on an Academic Board vote after the Access Agreement has already been submitted, so not only too late, but by a committee with no power over fees setting.
However it would certainly be funny to see the LSE position itself as a low-cost provider - London's second-cheapest after LMU at time of writing.
The takeaway lesson for policy makers is that markets don't work if players don't obey market rules. A supplier is 'supposed' (if I can simplify slightly) to charge as high a price as he or she can get away with, and make as many units as he or she can sell, but HEIs have non-market values and may therefore choose lower prices or decline to expand provision even where they could do so at a profit.
That said, LSE has not been shy about setting very high fees for Overseas and Postgraduate study - Postgraduate Home fees already range over £25k in certain cases. I suspect the £9,000 fee is what was put into their Access Agreement. Whilst institutional values have an impact, I think that government regulation (specifically the student number control) is still the key factor preventing the emergence of a market in UG fees.