I've read that people don't follow links from blogs, so I am going to excerpt a big chunk:
Chair: Can I come to off-quota, or core and margin, places? David Ward?Q685 Mr Ward: We touched on this a little earlier, but I want to ask specifically about the 20,000 contestable places. For these places, you propose that institutions will offer good-quality courses for less than £7,500. Is a lower cap level, in effect, being set for these places?Mr Willetts: We had to pick some kind of sum, and £7,500 was the one we picked. There is no right answer, but it seemed a reasonable way forward. The thinking was this. There is an alternative model of delivering higher education, which could cost significantly less than the classic go-away-from-home, three-year campus experience. If you like, it is a more transactional type of higher education. It may not be what every person wants, but it is part of the repertoire and a legitimate part of higher education. It may be more for mature students than for younger people. It may be more for people who are staying at home. It could be HE delivered in further education colleges. It could be vocational courses delivered by new providers coming in and saying, "We’re going to get you the qualification you need to work as an accountant or a lawyer." They may well be able to come in lower even than £6,000, but we thought under £7,500 gave an opportunity for rather more.We will see what becomes available. I know, for example, that the Open university is keen to link up with more FE colleges and to deliver HE in them, with an OU degree at the end. There will also be further education colleges, and perhaps some alternative providers as well. However, I am pretty sure that all those providers will be trying to do things differently; there may be more use of IT and distance learning. That is not the full story, and it will never be anything like the full story, but it is important that people have that option available. This is an attempt to nudge things that way and to encourage a bit of expansion.Q686 Mr Ward: Would you expect this to be the exception?Mr Willetts: After the first year, we will have to take stock of how both our steps towards contestability-the 65,000 AAB places and the 20,000 core-margin places-work. Then, we will have to take stock, and we will have to be careful about how things go, but I very much hope we will be able to go further. We will have to take a judgment on the balance between going further on the tariff, so that you go from AAB to ABB or something, and going further on core-margin, so that you go beyond 20,000; or you could have some combination of the two. However, that is not a decision we need to take now. We will take that decision in the light of our experience over the next 12 months.Q687 Mr Ward: The argument made against the £9,000 was that it would become the figure that people would specify, and we discussed that earlier. We seem to have done the same thing with the £7,500. You say it is to encourage flexibility in provision; people are being asked to come forward with a flexible alternative provision offer at a figure lower than £9,000.Mr Willetts: That is a fair point. If everyone congregates at £7,400, that would be rather frustrating, but HEFCE will have to take a decision about value, which will be partly about cost-effectiveness and partly about patterns of student demand. There is already some evidence that there may, for example, be further education colleges that can deliver higher education at less than £6,000, so I hope we will get a range, but it will ultimately be HEFCE’s decision as to what it thinks is in the best interests of students, and what is best value.Q688 Mr Ward: Would you expect this £7,500 to move with inflation at RPI?Mr Willetts: Yes, I do not think we have, as yet, specified on that, but I can see the logic of what you are saying. That was a slightly guarded answer; I did not want to make up policy on the hoof, but I can see the logic of what you are suggesting.Q689 Mr Ward: It was a question, not a suggestion. You have touched on college places. There will be many offers below £9,000 from colleges. I understand that they are to have 160,000 HEFCE-funded students on HE courses. Do you expect the 20,000 low-cost places to be additional to those existing HE offers?Mr Willetts: They are additional. I think that there is scope there. We will see how it plays out. We think that there is scope for rather more HE provision in different ways, as I have said, but FE colleges are certainly part of that.Q690 Chair: Before I bring in Paul Blomfield, may I ask a question? If the number of places at fees below £7,500 is set to increase each year, does that mean more and more people will be pushed towards, if you like, a low-cost-base education?Mr Willetts:I want to stress, as I have stressed at several points already, that this is a big change in the system; it is a big reform. It is quite important that we have the flexibility year on year to take further decisions in the light of how the system is developing.Q691 Chair: Do you not agree that if you have a limit on the total numbers, but you expand year by year the numbers on the sub-£7,500 level, you are effectively pushing people in that direction?Mr Willetts: To some extent, you are talking arithmetic. The issue, though, is whether "pushing" is the right way to describe it. One of the key factors will be what people are choosing. Clearly, if people are finding that there are courses that they want to do-Q692 Chair: Yes, but if there are only courses available at sub-£7,500, it is not much of a choice.Mr Willetts: There will be a wide range of courses. As we know, for individuals there will be a wide range of fees, with fee waivers and bursaries as well.Q693 Chair: If you have a set number, and there is an increase in proportion of the sub-£7,500 courses, the choice will become more limited at one level and greater at another. Now, whether you call that "pushing" or whatever, that is the reality of the situation. In effect, the total choice is limited, or more limited.Mr Willetts: That is something that we will look at in the light of the experience of the first year, as we decide how to develop both of the initiatives that we have put in the White Paper.
Seems to me Willetts' 'wait and see' line is at least a little misleading. The 2013 numbers will have to be allocated before the 2012 position is finally known, and moreover the private providers will be coming in in 2013, so there will have to be numbers made available for them. I do not see how they could possibly stop at 20,000 places.