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Great expectations

Mike Boxall

Education Investor

2 July 2014

There should be many reasons for expecting alternative visions for higher education (HE) and universities to feature prominently in next year’s general election. HE is among our largest national industries and export earners; it provides over half of the country’s R&D capabilities; it shapes the futures of nearly two million young people at any time; and it provides the economic mainstay of many towns and localities. 

It is moreover an industry in serious turmoil, beset by a tsunami of high profile issues, including controversial tuition fees, ‘unsustainable’ student loans, restrictions on student visas and outmoded regulatory controls. So it seems odd that none of this seems likely to feature in any of the party manifestos, and that no one seems surprised at the omission. Certainly university vice-chancellors have no expectations that the election or the next government will produce any improvements to their current difficulties. In a recent PA Consulting Group survey of heads of HE institutions, over 70% said that ‘unhelpful’ government polices now pose the greatest threats to the future success of their institutions. Yet few - less than 10% - expected that reform of HE would feature as a major policy priority for any future government.  

The disillusionment of vice-chancellors with their erstwhile sponsors in Westminster and Whitehall rang strongly from the survey, along with deep scepticism about the will or the ability of a future government, of whatever ilk, to make things any better. They are right to be sceptical, because government has less and less power to reform or redirect the HE system.  Many of the most important changes reshaping the system are nothing to do with government policies. And many of the other changes wrought by past government interventions are now politically, financially and practically irreversible. 

Drivers outside of government control include the continuing decline in the demographic cohort of 18-year-old school leavers, exacerbated by falling participation rates among boys, which means that universities will be competing for a shrinking core student pool until after 2020. There’s also the rapidly growing levels and quality of domestic HE provision in emerging countries that have historically sent their children to be educated in the UK – a threat to the other major revenue source for most universities, international student fees. 

Add to this the unstoppable progress of global information providers as the primary sources, channels and organisers of the learning resources that are the basic currency of higher education, and it’s clear to see the very raison d’etre of campus education is being challenged. 

Game changing reforms

Nonetheless, recent governments, and especially the coalition, have introduced numerous game changing policy reforms: notably the almost total shift from grant funding to dependence on tuition fees, backed by income-contingent student loans.  

The resulting funding regime has proved unpopular with the chattering classes, resentful of what they perceive as excessive fee levels and onerous repayment commitments. But there is in reality little prospect of significant changes to the fee and loan regime, whichever party prevails next May. There are two reasons for this: one, the current arrangements have quietly worked out quite well for universities, which have enjoyed a huge windfall from income per student jumping around £3,000 a year. Most students have realised too that the monthly repayment on their loans works out less than they’re happily paying for their smart phones. 

The other reason is that it would be economically, practically and politically unaffordable for the main parties to change the fee threshold or the terms of student loans to any significant extent. The decision to set the fee ceiling at £9,000 – more than £3,000 per head higher than the previous grant plus loan payments for classroom study – immediately became the norm across all providers, whose (largely fixed) costs have since risen to spend the funds available. 

Were Labour to press ahead with their suggestion of reducing fees to £6,000, it would precipitate the almost instant demise of dozens of providers (unless coupled with the unlikely reinstatement of the £4.5 billion cut from university grants). An increase in the fee threshold, as called for by many vice-chancellors, would be equally untenable without a costly rethink of the whole student support system.

There may be more degrees of fiscal freedom around the repayment terms for student loans, which at 9% above earnings of £21,000 are much more generous than applied pre-Browne. However, as with fee levels, it would be politically hard for the parties to backpedal on past generosity, whatever the benefits to the arcane arithmetic of the RAB charge. 

‘No pledges or promises’

Finally, on the policy agenda, there’s the issue of visa terms that discourage international students, which have without a doubt been hugely damaging for HE providers and the national economy.  Until recently, there did seem to be signs of cross-party agreement that international students should be excluded from immigration targets. However, blatant abuses of the current regime by some private providers, together with findings of lax controls among other mainstream institutions, have probably pushed back the prospect of visa policy relaxations way beyond next year’s election. 

So we should expect no pledges or promises of reforms to HE funding or regulation from any of the main parties.  What we probably should expect – and 70% of vice-chancellors in the PA survey predict – is for the very real issues facing the system to be kicked into the long grass of yet another independent committee of inquiry. 

The smart institutions, of which there are fortunately many, have already recognised this and are building alternative strategies with minimal dependence on government policies. It is truly the end of an era. 

Mike Boxall is a higher education expert at PA Consulting Group

For thinking and insights on higher education, click here or contact us now.

The article first appeared on Education Investor.

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