The revelation that the new tuition fees system – introduced in 2010 in the face of massive student protest – will in fact cost more to run than the old one, should come as a surprise to almost no one who paid attention to the debate over its introduction. A host of organisations and campaign groups warned from the outset that the increase in fees would save the government no money, largely as a result of the large costs of upfront borrowing and the fact that so many students would never earn enough to pay back their debt.

The motivation behind the coalition's policies in education and the broader public sector has been nakedly ideological from the moment it came to power. This agenda does not stem merely from an intellectual belief in the power of the market to do good, but also from a goal of demolishing the last remnants of social democracy. The marketisation of higher education performs a particularly pernicious role: if it succeeds, it could transform the consciousness of an entire generation of people, replacing students with consumers and injecting the logic of the market into the core of universities – one of the few sectors partially shielded from the years of Thatcher and New Labour reforms.

Over the past four years, we have gone from predicting the end of universities as a public service to witnessing it. Since 2010, international and postgraduate fees have rocketed, and unprofitable courses cut, as institutions seek to compete for the most profitable students. Staff conditions are under constant attack, and this year lecturers have been forced to undertake a marking boycott in protest at the suppression of wages.

Meanwhile, vice-chancellors and senior managers – many of whom lobbied for the new system – are increasingly treating universities as large private businesses. Institutions are outsourcing large swaths of their services, and those that can are attempting to vastly expand their operation into more lucrative commercial areas – often at the expense of local communities. The freedom to dissent on campus has already become a casualty, with the past year witnessing mass arrests, injunctions and unprecedented police intrusion on to campuses. This Wednesday, students in Birmingham will be demonstrating against the ongoing suspension of students involved in protest.

What is truly astonishing about the fact the new fees system will lose money is not the financial illiteracy of the policy – for it is not in truth a question of miscalculation – but that despite constant opposition and an open indifference to the democratic legitimacy of its policies, the coalition continues to get away with it. Successive governments have been able to erode public funding for higher education because the ideology that underpinned universal public services has been abandoned by the political mainstream, and because the student movement has mobilised patchily – sometimes with great force, but almost always without the help of the broader labour movement or even the National Union of Students (NUS).

With a general election looming, the full-blown fight over higher education funding may well return. Any government elected in 2015 may be tempted to alter repayment conditions on student loans, or to raise fees again – as is already an open secret.

If we are to stand any chance of salvaging public higher education, the student movement will need to escalate localised disputes over workers' rights and privatisation, clinging to its right to dissent, and build networks and organisations – such as the National Campaign Against Fees and Cuts – capable of co-ordinating another major mass movement after the election. Importantly, however, the institutions that might support this movement – the NUS and the Labour party – must see the current policy for what it is: an ideologically motivated attempt to transform society, which was given licence by New Labour politicians, and which must now be met with a clear and equally transformative vision for free, accessible education.