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University towns 'facing tough times'

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University towns and cities could see their economies hit by the government’s plans to triple tuition fees, research suggests.

Student spending accounts for up to 10% of the total economic activity of some cities, according to a report by Centre for Cities.

But this could change if students become more selective about where they study, or decide not to go to university at all because of rising costs, it says.

Under the government’s proposals, tuition fees will rise to a maximum of £9,000. Figures suggest that around two-thirds of universities are planning to charge the maximum.

The report warns that towns and cities need to plan ahead for the impact on businesses if fewer students are spending money in the local economy in the future.

It concludes that Cambridge, Plymouth, Coventry, Oxford, Dundee, Swansea, Hull, Brighton, Stoke and Nottingham are the 10 cities with the highest proportion of undergraduate spending compared to total output.

Centre for Cities analyst Paul Swinney said: “Universities, and the cities they are based in, face some challenging times ahead.

“In this age of austerity, universities have needed to revise their fee structures, but it is important that cities understand that decisions made by universities about fees, students and staff will have implications for local economies.

“It is likely that places like Oxford and Cambridge will fare better than others - demand for places is unlikely to slip, so the large contribution that students make to the economies of these cities through their spending habits is unlikely to change significantly.

“But other universities may find it more difficult to attract students. And this is likely to impact not just on the university itself but on the wider city economy.”

Responding to the report, a spokesman for the Department for Business, Innovation & Skills said: “No-one will be asked to pay upfront costs, there will be more financial support for poorer students and funding for universities will follow individual study choices leading to an increased focus on graduate outcomes.

“The student and university finance reforms are fairer than the present system and affordable for the nation.”

Click here to read the Centre for Cities report Starter for ten

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