The only way was up

We are one of a group of universities that have decided to raise undergraduate fees.

We are also one of the country's top achievers in widening participation. Last year, 97 per cent of our students were from state-sector schools and almost 40 per cent were from the Office for National Statistics' Socio-economic Categories four to seven.

Media reports assume, almost without exception, that it is natural for universities with the highest A-level requirements and the poorest records in widening participation to be the most expensive places at which to study. But this assumption is wrong.

Our decision to set headline undergraduate tuition fees at £9,000 was certainly not what the coalition government intended when it created its policy levers. Back in 2010, when the removal of block grants for teaching was announced and the maximum tuition fee was almost tripled, the intention was to create a market driven by students as customers. The idea was that price would be determined by demand, and the expectation was that market-led fees would roughly line up according to the newspaper league tables, with "top" universities (as ranked by the league tables) charging £9,000 a year, and the rest lining up along a gradient down to £6,000 or less, with an average of about £7,500. This was subsequently tightened by the introduction of "AAB" and "core and margin", squeezing the middle hard to try to push enrolment to one end of the quality/price spectrum or the other.

Why are the policy levers not working? A number of factors have combined to make it inevitable that a large part of the sector would move quite quickly to the maximum fee level of £9,000.

First, students know that price is a proxy for quality, and it will set the value of a brand. This is increasingly important in a tough employment market, where a degree is increasingly what an economist would call a "positional good". In addition, there is growing awareness that the payment system is really a graduate tax with repayment indexed to earnings and not the overall level of liability. So while the real issue of long-term student debt remains, there's little short-term benefit to a student in opting for a cheaper course.

But, of course, a brand is underpinned by the quality of what it represents, and students are demanding additional and improved educational opportunities and services. Understandably, the now-abolished teaching grant was invisible to them; from a student's point of view, even the "basic" fee of £6,000 is a near doubling in price. But from the university's point of view, a fee of £6,000 is a significant decrease in the amount of money available to provide for each student because of the loss of the "hidden" teaching grant. Taken with the reduction in other sources of funding, and particularly capital funding, it is almost certain that a university charging £6,000 would have to increase class sizes, reduce contact hours and cut back on facilities. Most universities have had to go significantly above the government's target average of a fee of £7,500 just to stand still.

There are additional challenges for universities that make a significant contribution to widening participation. The abolition of Aimhigher, along with the education maintenance allowance and entitlement funding to colleges, means that we now have to fund the bulk of access partnerships from fee income.

Combined with draconian controls over the supply of funded student places, unmet demand, the manipulation of AAB places and price control, this is about as far away from a free market as it's possible to get. As a consequence, the current and future situation looks very different from that anticipated and promised when current policies were set back in 2010.

Like many others, we've modelled our fee levels carefully. At £9,000, we can continue to expand our widening participation through access agreements with our partner schools and colleges, provide bursary support to a large proportion of students, and continue to improve our facilities to meet our students' aspirations. Students' repayments after graduation will not be adversely affected in the short term.

Were our fee levels lower, we would not be able to maintain or improve the quality of the courses we offer, or to continue to offer the opportunity to a large number of students who are the first in their family to go to university.