Demos Daily: Future Universities

The coronavirus pandemic has changed the perspective of many budding students planning on starting university in the next few years. With the majority of this year’s intake still not knowing if and when their courses will begin after the summer, many will likely be concerned that they won’t be getting the full ‘uni experience’. If no changes are made to tuition fees, then it’s understandable that many may also feel they won’t be getting enough bang for their buck. Together with the new commitment from the Prime Minister that the government will guarantee apprenticeships for young people, university could be much less appealing for some in future years. The further education landscape is shifting, and both the government and universities themselves may face an urgent need to adapt.

Back in 2012, we examined the government’s White Paper on higher education in our report Future Universities, and put forward recommendations to make the sector more sustainable.

Read the executive summary below, or the full report here.

Executive Summary

Introduction

This paper is an attempt to think through the reforms in the recent White Paper on higher education in England, Students at the Heart of the System, and the reform of tuition fees and student loans that passed through Parliament at the end of 2010. It accepts thegeneral approach of these reforms, which is:

  • to shift more of the burden of funding higher education to its users;
  • to make this shift in burden as fair as possible through ‘progressive’ terms of repayment;
  • to allow good institutions to expand and bad ones to contract;
  • to make it easier for new market entrants to bring innovation to the sector;
  • to phase out ‘quotas’ on numbers of students;
  • to increase social mobility through higher education;
  • to put English higher education on a sustainable footing.

However, the paper takes issue with the detail of the reforms put forward by the present government and presents alternative policies aimed at correcting (some of) their shortcomings. The idea is not to articulate precisely costed policies. Rather, it is to provide a set of policies that complement one another, the exact calibration of which remains flexible and should be based on more detailed economic analysis than can be provided here (but which Demos hopes to carry out in the near future). Thus the idea is to create a debate around what room for manoeuvre there is within the current general policy framework as we enter the next political cycle in 2015 (or perhaps sooner).

The paper is focused on full-time undergraduate education and has little to say on other aspects of higher education such as postgraduate education and links between universities and businesses. Such other aspects are highly important and are not discussed here simply due to restrictions of space. The paper also does not come close to dealing with all the issues raised by the White Paper itself, again this is due to lack of space.

Methodology

This paper is the result of desktop research by the author and interviews with vice chancellors of English universities, to which the author owes a debt of gratitude.
Key argument
This paper finds that the Government’s recent reforms of higher education have in some instances over-extended a free market approach and in other instances under-extended it. Rather than starting from an ideological position with regard to markets and the state (as the Browne Review seemed to do), the paper starts by defining what higher education is supposed to do – primarily, provide a ‘universal education’ where graduates become independent learners in their chosen fields. It then asks what has made English higher education successful (on the whole) in providing such an education, arguing that success is built on three principles:
  • open competition for the best students and staff;
  • institutional autonomy;
  • the ‘Robbins Principle’ which states that: ‘courses of higher education should be available to all those who are qualified by ability and attainment to pursue them and who wish to do so’.

Thus when the paper advances an argument for a free-market approach, it does so because such an approach helps sustain these three principles. When it advocates some curtailment of the market, it is for the same reason. On the whole, it is argued that markets are well suited to maintaining the three principles which in turn encourage and allow institutions to focus on developing excellence in distinct educational missions (including when missions consist in providing a broad liberal arts education).

However, where markets fall short the state should certainly act as funder, administrator and regulator of higher education, as it has done, largely successfully, in the past. This classic British compromise is not a fudge to be resolved by clear-sighted committees of economists. Rather, it is what has brought English higher education the success it currently enjoys.

On analysis of the recent White Paper the following two conclusions are reached, which are the central claims of the paper and underpin the policy recommendations.

  • That the White Paper does not deal with the central impediment to an efficient, competitive and high quality sector, which is excess demand for student places.
  • That the damage to social mobility from locking out prospective students from higher education is likely to be greater than that of the debt averseness created by large loans.

Key recommendations

The following are intended as amendments of the general approach that has been adopted since the recent White Paper, not a radical rejection of that approach. However, some of the policy shifts called for are significant and would require political bravery to be implemented (the full list of policy recommendations is at the end of the paper).

  • The Government must work towards reducing the cap on student numbers so that as many as possible of those who are capable of benefiting from higher education can do so, and so that supply and demand between degree places and prospective students are better matched. The current mismatch between supply and demand is by far the biggest impediment to bringing down fees and to introducing competition into the sector. The cap on student numbers also impedes social mobility by restricting access. Unmet demand could reach 100,000 individuals per year by 2020 (1) making the cap a serious problem that must be addressed.
  • The Government must make the repayment terms of loans moderately less generous in order to bring down the unacceptably high level of loan write-off that will occur under current proposals. The anticipated high level of loan write-off (estimated to be between 32 per cent and 37 per cent of the loan book) is the major reason for a stringent cap on numbers (and hence is the major cause of the mismatch between supply and demand cited above).
  • The Government should, at the earliest possible date, start the process of removing all restrictions on the growth of higher education institutions beyond those imposed by any remaining cap on student numbers and the risk-based regulation and quality assurance assessments carried out by the Higher Education Funding Council for England (HEFCE) and the Quality Assurance Agency (QAA). The ultimate aim should be to create a completely open market in terms of institutional expansion and contraction.
  • The Government should not allow institutional spend on bursaries to count towards Access Agreements. This would mean that the majority of bursaries and all fee waivers (see next recommendation) would be means-tested and centrally distributed through the existing student loans system, and thus fair, well-targeted and easy to understand. Under the current system the complexity of deciding how much different university courses will cost is overwhelming, with candidates having to factor in different kinds of bursaries, loans, maintenance grants and fee waivers. Moreover, at the moment, students are paying (through higher fees) for bursaries for other students (hardly the most equitable way of funding social mobility).
  • The Government should ban universities from offering fee- waivers so price is clearly signalled through tuition fees. Institutions are able to use fee waivers as a quick and easy way to satisfy Access Agreements whilst at the same time bringing net fees down so as to be able to bid for ‘margin’ places. This use of fee waivers to satisfy OFFA means less effort and resources are spent on what really increases social mobility: successful outreach programmes.
  • HEFCE should look to encourage the teaching of external degrees where 70 per cent of content is set and assessed by an external institution (e.g. the University of London, a professional body, an established education provider). The spread of external degrees would lead to efficiency savings whilst also driving up standards and reassuring employers and students about the quality of degrees. Allowing 30 per cent of an external degree to remain ‘in-house’ would preserve the ‘synergy’ between research and teaching that currently exists in most UK universities.

(1) Figures according to HEPI analysis from Higher Education Supply and Demand 2020, Robbie Coleman and Bahram Bekhradnia, HEPI, 2011.