The Labour Party should make a ¡°radical break¡± with the current higher education system, lowering costs to the taxpayer with measures including the scrapping of student maintenance grants and asking universities to ¡°change their insular attitudes¡± on student credit transfers.

John Denham, the former Labour universities secretary, was scheduled to set out these arguments in a speech at the Royal Society of Arts in London on 16 January. He wants to offer a vision of how the party could bring down fees to about ?4,000 a year for mainstream three-year degrees while reintroducing additional public funding to keep universities¡¯ overall teaching income at the same level as today.

Labour could offer ¡°lower fees, lower debt, lower [loan] payments, as many graduates and new money for research and teaching¡±, he says in a draft of the speech, which calls for a ¡°radical break with both the current system and that left by Labour¡±.

He told Times Higher Education ahead of the speech: ¡°I very much hope these ideas will be taken forward into [Labour¡¯s] policy review.¡± That review, aimed at producing ideas for the general election manifesto, is being led by Jon Cruddas. Mr Denham added that he has kept Liam Byrne, Labour¡¯s shadow universities, science and skills minister, ¡°well briefed about my thinking¡±.

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However, the plan may be problematic for some in the Labour Party as it would involve shifting billions of pounds from loans into direct public funding, at a time when a Labour government would be under pressure on public spending.

Mr Denham argues in his speech that a future policy should ¡°put as much money as possible into teaching¡±, rather than spending on loan write-offs for students; encourage greater provision of two-year degrees; foster the creation of 50,000 employer-funded ¡°no fee¡± courses a year; and scrap maintenance grants in favour of loans.

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The Southampton Itchen MP, who is leaving Parliament at the next election, admits that scrapping maintenance grants has been seen as ¡°politically untouchable¡±.

But calling for living costs to be lowered by having more students study at home, Mr Denham says that Russell Group and Million+ members, for example, should ¡°actually cooperate and collaborate on the delivery of courses¡±. He continues: ¡°Real flexibility of study would enable students to study mutually recognised credits at universities within their locality.¡±

Mr Denham says that, based on government figures, in 2015-16 there will be ?6.7 billion of ¡°tax-funded spending¡± on higher education, with ?4.2 billion spent on writing off the portion of loans that will never be repaid by students ¨C the resource accounting and budgeting charge.

The former minister says his plans, including replacing a large portion of loans with direct public funding and thus lowering RAB charges, could produce a ?4.7 billion a year allocation of direct funding for teaching. This would amount to a ¡°flat-rate student entitlement which goes to their university¡± of ?14,800, for the duration of their studies.

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In addition, ¡°The total fee cost of the average three-year degree would be less than ?10,000 ¨C about the level fees were at when Labour left office¡±, while a ¡°full cost university¡± three-year course ¨C say, at a research-intensive institution ¨C would fall from the current ?,000 ¡°to about ?12,000¡±. The total fee cost for a two-year degree ¡°would be less than ?5,000¡±.

john.morgan@tsleducation.com