Vince Cable's department gets its university sums wrong again

There is but one conclusion to draw from today's rather belated HEFCE grant letter (these things are usually issued before Christmas) - that BIS, Vince Cable's business and skills department, has got its sums even more badly wrong than we realised over its student support package. There was a good reason why Labour had a lower starting threshold for student loans than the £21,000 adopted by the coalition in a hopeless bid to rescue Nick Clegg from ignominy for his broken promise: it was based on how quickly people could pay back when they were in work. There is a big difference between starting at £15,000 and at £21,000 in the speed of repayments.

By lifting the starting threshold so much, even with added interest repayments, the coalition has made it impossible to grow student numbers significantly. At the same time, the continued linking of loans to fees, rather than maintenance, with no effective agreements with other EU countries over collecting unpaid loans, has left another black hole in future BIS finances. No wonder they have announced an effective cutback of 15,000 places in today's remit letter to Hefce, the funding council. Or, rather, they haven't. This is what the letter which is signed by Vince Cable and David Willetts actually says:

In this context we want to work with the Council as follows. First, we need the Council to bring its sector-wide entrant controls into closer alignment with the Government's financial planning. HEFCE has historically set student number control limits across the sector slightly above the recruitment level assumed in the Government's expenditure plans. This recognises that the control is a maximum and some level of under recruitment, at the sector level, was to be expected. The aim of over allocating in this way was to achieve the Government's planned student numbers. The recent trend for strong recruitment across the sector now makes this approach unnecessary. Furthermore, it exposes Government to higher than budgeted costs which cannot be absorbed at a time of financial constraint. As a result, we are now asking the Council to reduce its entrant control maximum by 5,000 places in 2012/13. This brings it in line with our original spending plans and reduces the risk of over recruitment. It does not represent a reduction in the total number of students the Government expects to fund.

I've read a lot of officialese in my time, but this one takes the biscuit. As the National Union of Students notes in its response, the cuts come "from not repeating a planned stimulus of 10,000 places designed to combat the effects of recession, and also a change to controls on universities that over-recruit which will see 5,000 less places available."

At the same time, universities face bigger fines for over-recruitment than before, and there is no news yet on whether competition will be extended both at the upper level, by moving from free recruitment of those with AAB in their A-levels to ABB, and at the lower priced end, by extending the number of low cost places that can be bid for (or even lifting a cap for qualified students paying less than £6000 a year).

The Government was right to grasp the nettle of tuition fees, but it was wrong not to do its sums over its repayment terms for graduates. With a planned higher education white paper already ditched in the confusion, the coalition's higher education policy has lost its way.