BRIEFING NOTE ON ISSUES IN HIGHER EDUCATION OCTOBER 2012

Roger Brown, Carole Leathwood and Helen Carasso

INTRODUCTION

This paper provides a series of briefing notes on a number of current higher education policy issues.

It is widely recognised that the higher education sector has a vital role to play in the economic, social and cultural life of the country, but it is one that is increasingly being undermined by government policy. Universities are experiencing unprecedented financial insecurity whilst the sector’s reputation is being unnecessarily damaged by immigration policy and the actions of the UK Border Agency. New evidence that disadvantaged students are being deterred by fear of debt comes on top of UCAS data showing that the numbers of UK and European students entering UK universities this autumn has declined by 14 per cent, even some highly selective institutions having failed to achieve their target numbers. Instability is rife and both widening participation and social mobility are under threat in a system marked, through government policy, by increasing levels of class-based stratification.

There is therefore a clear and urgent need for a new vision and direction for HE policy. To support this, this paper contains analysis and recommendations in five key areas:

1. Purposes and functions.
2. The funding of undergraduate education.
3. Research.
4. Widening participation.
5. Quality assurance.

In each case a description of current government policy is followed by an analysis and alternatives.

The main recommendations are:

1. There needs to be a rebalancing in the purposes and functions of higher education with a much greater emphasis on public purposes, funding and regulation.

2. An undergraduate fee reduction to £6,000 needs to be accompanied by the restoration of the HEFCE teaching grant and a support package tilted much more towards the disadvantaged.

3. Research selectivity should be confined to areas that are resource-intensive. There should be greater incentives for collaboration and for research that serves social and community, rather than commercial, objectives and interests.

4. Whilst the key to equitable participation lies in schools policy and funding, disparities in institutional funding and esteem should be reduced. Instead of being used to promote individual universities, resources for support and outreach should be pooled and used to raise aspirations and promote progression across the country.

5. There needs to be stronger regulation of academic standards but the real key to raising quality is to increase funding per student and constrain competition for students and income.

In summary, we believe that what is needed is not a market-driven system but one that recognises and promotes the multiple and distinct public and private purposes of universities; protects institutional autonomy but also recognises the obligations of universities to the society that grants them that autonomy; recalls universities to their core functions of teaching and research rather than the pursuit of resources and prestige; acknowledges the pressures on the public purse and uses that money to control unjustified, and socially dysfunctional, differentials between different categories of institutions and students; incorporates some competition for students and research funds but within an overall institutional ‘division of labour’ that maximises functional differentiation and minimises reputational hierarchy; and offers students, research funders, the Government and society as a whole the best value for their commitment to, and investment in, higher education. In short, a balanced, fair, socially responsive but efficient higher education system.

PURPOSES AND FUNCTIONS

Current Policies

Following the October 2010 Browne Report, current Government policy sees higher education primarily as the provider of private goods and benefits; moreover it sees those goods and benefits mainly in economic terms (employment, salary, benefits). The assumption is that higher education should as far as possible be organised on market lines, with levels of public subsidy reduced and the remaining subsidies channelled via the consumer, the student. At the same time, institutions should compete not only on product quality and availability but also on price (tuition) and status. Increased information and leverage for consumers and lower market entry barriers for new providers are further key strands. Research funding should be even more highly concentrated whilst widening participation should focus on fairness of access to the more highly selective institutions, with any progress achieved through students’ and institutions’ own efforts, rather than on the more general issue of access to higher education generally by students from a wider range of backgrounds for which the Government itself accepts a major responsibility.

Assessment

Although they go further than any previous British (or other) national administration, these policies need to be seen in the context of a progressive process of marketisation that began with the Thatcher Government’s removal of the subsidy for overseas students in 1980, and continued with the introduction of maintenance loans in 1990, top-up fees and the (temporary) abolition of maintenance grants in 1998, and variable fees in 2006. Other important elements of this process were the gradual removal of formal distinctions between different categories of higher education institution (especially the abolition of the ‘binary line’ between universities and polytechnics in 1992); the concentration of research funding (with the first selectivity exercise in 1986); the development of system-wide institutional performance indicators (from the mid-1980s); the increasing influence of corporate models of institutional governance and management (the 1985 Jarratt Report); and, last but not least, the increasing role of market mechanisms (institutional rankings or ‘league tables’, the National Student Survey, the Key Information Set, etc.) within quality assurance.

Together, these policies have made UK universities more efficient and more responsive to stakeholders; institutions have also become more entrepreneurial and, possibly, more innovative. But they have reduced the level of institutional diversity in the system, and increased stratification. They have also damaged quality. Perhaps most seriously, they have helped to disguise and/or justify the longer term financial deterioration of the system, to the point where, on official figures, student-staff ratios are nearly two points higher in the universities (17.1) than they are in the state secondary schools (15.3). This reflects the fact that in spite of some improvement since the early 2000s, the UK spends a smaller proportion of its GDP on higher education than nearly every other major OECD country.

The Coalition Government’s higher education reforms will reinforce these effects. On the one hand, even to prevent a further worsening in the financial position requires some pretty heroic assumptions about the likelihood that private revenue (repaid fee and maintenance loans) will substitute for public spending; matters are not helped by the Government’s refusal so far to reveal the detailed assumptions on which its projections of future claims on the Exchequer are based. On the other, the ending of most direct subsidies of teaching and the creation of what is in effect if not in name a ‘voucher’ system, will create (almost certainly intentionally) a much more hierarchical system without any compensating gains in quality, efficiency or equity.

The only real beneficiaries of these policies are the small number of highly selective universities that are able to charge the maximum fee of £9,000 to as many students as they can be bothered to recruit whilst continuing to absorb the lion’s share of the available (somewhat more protected) research funding. The remaining institutions, the vast majority, are reduced to second or third class status even though they may be, indeed they almost certainly are, fulfilling functions that are at least as socially and economically (and educationally) valuable, and with greatly inferior resources. This is not only unjust but also wasteful as the additional resources go not into improving student education but into raising institutional status and position through investments in status-raising activities like the recruitment of expensive research ‘stars’. This is why a fundamental change in Government policy is needed.

Alternatives

The starting point must be an explicit recognition of the role of universities in producing a wide range of both private and public goods (democratization and political institutions, human rights and civic institutions, political stability, community activity, life expectancy, reduced inequality, less crime, lower health and prison costs, a better environment, etc.). This in turn requires (a) an adequate level of public funding, at least to the level of our main OECD analogues, and (b) public funding being used to subsidise both institutions and students (through income contingent loans for fees and maintenance, alongside maintenance grants for the most needy, as now).

As argued in the note on research, selectivity in research funding should continue but be confined to areas of research that are disproportionately expensive to conduct (the original impetus for the RAE) or where there are concerns about a lack of a critical mass; the quality of the remaining research should be monitored through local audits, as teaching now is. Institutions’ public funding for both teaching and research could be combined through multi-annual performance agreements that could also include subsidies for other activities that are seen as socially, culturally or economically valuable, such as widening participation and economic development. Subsidies should also be offered for institutional collaboration: ideally, universities, even the most prestigious, should work in partnership not only with one another but also with other post-compulsory providers, schools, employers, trades unions, local authorities and other local agencies.

THE FUNDING OF UNDERGRADUATE EDUCATION

Current Policy

The aspect of the changes in the funding of Home/EU undergraduate teaching introduced from autumn 2012 that is most visible to the public is the increase in the maximum permitted annual fee to £9000 (subject to an institution charging more than £6000 gaining the approval of OFFA for its Access Agreement). This raising of the cap has, for the first time, resulted in a significant range of fees being charged by English universities, with variation within, as well as between, institutions; London Metropolitan University, which attracted headlines with its decision to charge £4500 for some courses, has an average fee of £6850, and charges £9000 for some courses.

An equally significant change however is the 80% reduction of the amount distributed by HEFCE through its ‘T’ grant. The remaining grant will be allocated to laboratory sciences (towards the additional costs of such courses) and SIVS (Strategically Important and Vulnerable Subjects) – principally highly quantitative courses and modern foreign languages. Even though this change is to be phased in with new cohorts of students, its implementation in 2012 is expected to result in an immediate reduction of £830m (equivalent to 20 per cent) of direct funding for teaching. Instead, public funding will be support higher education teaching indirectly, through the subsidised student loan system, the system that has operated in America since the 1970s.

Assessment

In introducing these changes, the Government has cited the benefits that the principles of the market are assumed to bring: efficiency, quality and choice. On many measures, the UK higher education system is already more efficient than that in most other major OECD countries and there is a clear risk that a further reduction in core resources will begin to impact on the quality of provision. By taking places for entrants with AAB+ (ABB+ from 2013) outside HEFCE’s student number controls, it could be argued that some applicants at least will have greater choice under the new system; however, and in spite of Ministerial pleas, the majority of the most selective universities (Bristol and UCL are notable exceptions) have not responded by increasing their undergraduate places.
Furthermore, for choice in a market to be genuine, the ‘consumers’ – that is to say UCAS applicants – must have the information and knowledge with which to make their decisions. The introduction of KIS (Key Information Sets) from September 2012 is intended to provide information on courses on a comparable basis, covering items such as methods of teaching and assessment and graduate destinations, as well as fees and bursaries. The categories were chosen on the basis of research with students and applicants, but the need to present the data in simple graphics and ‘headline’ figures has resulted in broad generalisations which lose fine grained (but highly relevant) detail. Even ignoring this point about the relevance of the information contained in KIS, higher education is an ‘experience good’ and thus applicants at the age of 17/18 cannot reasonably be expected to make entirely informed choices, even with access to this data.

The UK already has one of the most privately funded regimes. It has been estimated that these changes will shift the balance of cost sharing for an undergraduate degree between the individual and the state further, from 40:60 to 60:40. Assuming costs are being allocated equitably in line with benefits received, this suggests that obtaining a degree is of greater benefit to the graduate than to society more widely. It is however notoriously difficult to estimate even the financial gain to an individual (the graduate premium) let alone the other personal benefits and the economic and non-economic benefits of graduates to society.

Furthermore, the cost to the public purse of underwriting student loans (the RAB charge) is highly contested – this depends both on the salaries that graduates earn and the effectiveness of processes to collect repayments, especially from those who do not pay income tax in the UK (whether Home or EU students working outside the country). The Government uses a figure of 30% in its estimates, but several authoritative commentators have queried the underlying assumptions (on average fee and levels of repayment), and suggested that the value of student loans to be written off after 30 years will realistically be several percentage points higher.

The cumulative costs of the student loan system may, according to the OBR (Office of Budget Responsibility), add £50bn (or 3.4 per cent of GDP) to the national debt by 2030. These cost considerations and the resulting concerns about the sustainability of the loan system raise the prospect that future governments may be attracted to sell off some or all of the student loan portfolio, to transfer this debt to the private sector – however such a sale would only be attractive to potential purchasers if the terms of the loans became more commercially realistic. They may also partly explain why (in spite of widening participation considerations) there is to be no penalty for early lump sum repayment of student loans.

Perhaps in part because of these concerns about the long term costs of the student loan system that will operate from 2012, the Government has introduced two elements to the package of reforms related to undergraduate teaching that have the effect of encouraging institutions to reduce the fees that they charge (and thus amount of fee loans to which their Home/EU students are entitled). These are the terms of the National Scholarship Programme (NSP) and the ‘core and margin’ policy for the allocation of a proportion of places under HEFCE student number control.

The NSP is co-funded by universities and HEFCE; it gives support worth £3000 annually to specified numbers of undergraduates within each institution from the lowest income households – however only £1000 can be in cash, the remainder must be in indirect benefits and many institutions have met this requirement by offering fee waivers. Once they have this mechanism in place, and to ensure that they can offer the same package to all students from similar backgrounds, many universities offering fee waivers to their NSP students are also giving these to others from low income backgrounds.

The ‘core and margin’ policy enabled universities and colleges charging fees of no more than £7500 to bid for undergraduate places from a ‘margin’ of 20,000 created by top slicing existing HEFCE allocations (with certain categories of ‘core’ places excluded from the calculations); when this policy was announced for 2012-13, a number of universities and colleges submitted revised Access Agreements, so that they could bring their fees below £7500. This had the effect of reducing the average fee charged to £8354, from £8393 (£8071 from £8161, when fee waivers are included). HEFCE’s allocation of places was done on a formula basis, in proportion to the bids received; this resulted in 10,354 places going to FE colleges from the margin of 20,000 that had been created mainly by deducting them from universities. This shift in places subsequently, it has been suggested, led to a number of universities reviewing their franchising arrangements with FE colleges.

Although it is still too early for definitive conclusions, it seems clear that the first year of the new fee regime has deterred large numbers of students from disadvantaged backgrounds whilst reducing institutional incomes and creating a great degree of instability for most institutions.

Alternatives

The problem that the Government faces with the affordability of its contribution to the costs of undergraduate teaching and student support is inevitably related to the participation rate – this has now reached 47% (for English-domiciled 17-30 year olds studying in Great Britain). While it is clearly important that individuals who can benefit from education and/or training beyond compulsory education age have the opportunity to do so, under the current pattern, a full-time university degree is seen as the first choice, with other routes such as apprenticeships having lower status and hence attraction to applicants. More work needs to be done to encourage the consideration of such alternatives, for example through the provision of information, advice and guidance that is easily accessible to people both at school or college and throughout their adult life. At the same time, the supply of apprenticeships and other forms of education and training (whether workplace based or not) will need to be increased to satisfy the demand created for such courses. It is encouraging that the Official Opposition has recognised this and the importance of raising the profile of ‘vocational’ and work-based education more generally.

Given the limited public resources that are currently available to fund post-compulsory education, consideration should be given to remodelling the higher education student support package to shift the balance further towards those from the lowest income backgrounds, for whom fear of debt appears to be a greater deterrent to participation. There are various ways in which this could be done, bearing in mind the fact that the personal tax regime is now far less onerous for higher earning individuals than it was before the reforms of the 1980s and 1990s.

If a Labour Government were to reduce the fee cap to £6,000, in line with its current policy position, it would be essential to replace this source of income to institutions with an equivalent restoration of the HEFCE T grant. This would tend to move the share of public:private funding towards 50:50, which would be desirable on many grounds, not least that it would provide a means of redressing some of the huge (and increasing) disparities in institutional funding (see the note on widening participation).

RESEARCH

Current Policies

The UK research base has been judged the most productive of the G8 countries, and a key aim of current research policy is to maintain this ‘world-class’ status. Public funding for research is distributed selectively through a dual system of block grants based on performance in periodic research audits (the Research Assessment Exercise, the RAE, now replaced by the Research Excellence Framework or the REF) and through applications to the Research Councils. The aim of selectivity has been to identify and fund research excellence, with research funding increasingly concentrated in a smaller number of research intensive universities. Evidence that the UK’s research performance and impact has increased as funding has become more concentrated has legitimised recent policy directives aimed at increasing the concentration of research funding even further, so that from 2012-13, even research judged to be ‘internationally excellent’ will no longer be funded as part of the block grant. Research council funding is also increasingly concentrated, both in fewer institutions and on fewer, larger grants.

Current policy also emphasises the commercialisation of research, with partnerships between universities and industry seen as important for innovation and the exploitation of research findings. In a context in which competition for funding is intense, and where gaining external funding has become a prerequisite for conducting research in many universities, academics are increasingly under pressure to seek out funding from a wide range of potential sources.
Finally, there has been a renewed emphasis on the impact of research, with requirements that research council grant applications include a statement of the anticipated impact of the proposed study, and an assessment of research impact will constitute 20% of the overall assessment for REF 2014. However there remains no requirement on universities, even the most research intensive, to show how staff research benefits student learning.

Assessment

The introduction of selectivity, in particular through the RAE, has increased the priority given to research across the higher education sector and increased research productivity. There are, however, drawbacks, not least the prioritisation of research at the expense of teaching, the encouragement of institutional game-playing, and the emphasis on multiple academic journal publications rather than publications that facilitate public and professional engagement. There is also a tendency to encourage conservatism and homogeneity rather innovation and diversity. The RAE has also reinforced inequalities, with white, senior, male and able-bodied academics more likely to be entered than others, with consequences for career advancement. Finally, there is the considerable cost of these activities for universities and academic staff, with research now a high-stakes activity for individual academics, research groups and universities.
Assessments of quality are also not straightforward: research success in the RAE has been, in part, about learning to ‘play the game’, the criteria used to assess quality are not without contention, and there is evidence from other countries that assessments of research excellence can be influenced by extraneous factors such as the gender of the researcher. The criteria for assessment tend to benefit senior staff at the expense of newer researchers, and discipline-specific research rather than multi-disciplinary work. Research that does not easily fit with the dominant themes of a research group or department may also be excluded, however good that research is, resulting in a narrowing of research agendas.

The increasing concentration of research funding in fewer universities leads to the perception that excellent research is only found in these institutions. Yet a significant proportion of research in such institutions remains uncited, whilst RAE 2008 identified research excellence across a wide range of institutions. Nevertheless, extreme concentration continues, with the Russell Group of research-intensive universities increasing its share of funding in 2012-13 by 1.5% to 71.3%, whilst the allocation to the Million Plus Group of post-1992 universities has fallen by over 10% to just 2.1% of the total. Whilst some level of concentration may be justified for resource-heavy disciplines, where the cost of expensive labs, etc, mitigates against a wide dispersal of funds, the resulting geographical concentration also means that some regions lose out, with implications for regional community and economic development. The case for a general policy of increased concentration has not been made: not only is excellent research widely distributed, but those universities that receive only modest levels of research funding have been particularly effective in using it, including generating additional funding from other sources. Such universities have often been at the forefront of developing new knowledge, subject specialisms and methodologies. Moreover, the assumption that only large research groups produce excellent research is not supported by the evidence, whilst the over-concentration of research funding in a small number of elite universities and research groups raises questions about the kinds of research questions that are asked and the kinds of knowledge that are produced. In addition, whilst most researchers want their research to have an impact, the requirement to predict impact in advance and to demonstrate a direct relationship between research and economic/social impact risks further restricting the kind of research that is conducted.

Furthermore, the increasing emphasis on the commercial exploitation of research findings, along with the growing reliance on commercial funding, risks limiting research to that with high potential of economic utility in the near future, with basic or ‘blue skies’ research, along with research in the social sciences/humanities and any research that is potentially critical of commercial or policy interests, at risk. Detrimental effects of the increasing commercialisation of research include large corporations exerting undue influence on the setting of research agendas and bias in the reporting of findings, with, for example, direct commercial funding of projects making it more likely that the results will be favourable to the funder. Confidentiality agreements to protect commercial interests potentially raise further ethical issues.

Finally, research policy has contributed significantly to the increasingly hierarchical stratification of universities. Variation in teaching quality between institutions is minimal: it is research reputation that predominantly determines which universities are labelled ‘the best’ or ‘top’, with universities that have been most effective in widening participation struggling to maintain their research activities and denigrated in this value system. This threatens future research capacity. Post-1992 universities, small-scale projects and research deemed ‘internationally or even nationally excellent’ are all important for the support and development of early career researchers, who also crucial for the development of new and innovative ideas.

Alternatives

There is a place for selectivity in research funding. Within the dual system of funding, it makes sense for research councils across all subject areas to distribute funds on the basis of assessments of grant applications, though it is important to ensure a wide range of funding opportunities to encompass ‘responsive mode’ and programme grants, smaller as well as larger scale projects, basic and applied research, interdisciplinary initiatives and opportunities for early career researchers. Selectivity, however, is not the same as concentration.

In relation to the distribution of block grant research funding, there is a case for selectivity for those areas of research that are heavily resource-dependent. Some form of research audit activity may make sense for these areas. For all other areas of research, however, the distribution of institutional block grants, to cover teaching, research and other key activities (such as widening participation or local community/business partnerships), could be based on an agreed system that includes institutional plans along with a formula that reflects staff/student numbers and subject spread. Additional funding could also support institutional collaboration within the HE sector and, potentially, with other education providers, community organisations, etc. The aim should be to encourage and facilitate excellent, innovative and critical research across the disciplines to further knowledge and the development of civil society. The focus needs to move from the emphasis on research that serves the market to research as a public good.

WIDENING PARTICIPATION

Current Policy

All institutions charging more than £6,000 in tuition must agree Access Agreements with the access regulator (OFFA) setting out what they are doing to attract more students from disadvantaged backgrounds; if these efforts are deemed insufficient the regulator may decline to approve their fees. There is more generous financial support for low-income students, both full- and part-time. In addition the new National Scholarship Programme, jointly funded by the Government and institutions, provides assistance in the form of fee waivers or discounts, free foundation years, discounted accommodation or other services, and/or financial scholarships/bursaries for low-income students. Most recently, OFFA and HEFCE have been asked to report on how access can be increased within existing policies. The whole widening participation problem is now seen in terms of ‘fair’ access to more selective institutions rather than in terms of access by underrepresented groups to the university system as a whole. Moreover, responsibility for improving participation is increasingly being shifted to institutions and students/graduates (through the diversion of fee income), and away from the government and the state. This is in spite of statements by Ministers and others accepting that social mobility has stalled and that the education system is in large part responsible for this.

Assessment

The extension of fee loans to part-time students has been widely welcomed, as has the marginally more progressive nature of the support regime. Whether these enhancements will be sufficient to overcome the longstanding and well attested aversion to increased costs, risk and debt on the part of many students and potential students from disadvantaged backgrounds remains to be seen: at present the evidence from enrolments this year is against it. In any case, such improvements have to be set against the abolition of policies – notably, Aim Higher, Educational Maintenance Allowances and subsidies for adults on Level 3 and Access courses – that were known to be helping with participation. Of even greater importance, however, are new policies, both inside and outside higher education, that are directly inimical to wider participation in higher education generally.

In higher education, the new funding regime encourages the spread of merit-, rather than need-based, institutional aid packages. It also discourages the use of ‘contextual’ data to offset the advantages of applicants who have attended private or selective schools. The continuing constraints on non-AAB+ places are also unhelpful, the 50 per cent participation target having long been abandoned. But the main threat to widening participation from within higher education comes from the increased stratification of institutions and the constituencies and social groups they serve. This is not only the inevitable but also the intended outcome of the Government’s policies, aimed as they are at protecting the interests of a small set of highly selective institutions at the expense of the rest.

Even so, the greatest threat to widening participation in higher education arises from the combination of unprecedented spending cuts in, and the ever increasing fragmentation of, the compulsory sector. Whereas across all OECD countries, on average, 57 per cent of the performance differences between schools can be attributed to the social character of the intake, in the UK the social intake accounts for over 70 per cent of the performance differences . There is a clear relationship between variability in school performance and the fairness of progression to higher education: countries providing fairer access to higher education – such as Finland, Ireland and Spain – are also those with the most equal between-school performances in PISA 2000. This has led the OECD, in its recent Economic Survey of the UK, to recommend that the Government should experiment with proscribing the use of residence criteria in admission to state schools in some areas. This would be an important step towards the objective of trying to ensure that state-funded schools are as similar in character, intake and process as possible, so that a child’s background, or where they live, makes little difference to the kind of school they attend, the kind of education they receive, or the sort of post-compulsory experience they go on to have.

It seems clear that, whatever may have happened in the past, the intensification of market-based policies in the compulsory sector, alongside huge spending cuts to education generally, will widen the existing class-based differentials between schools, and thus reduce even further the supply of students from disadvantaged backgrounds with both the qualifications and the motivation to enter higher education. At the same time, tuition fee policy and the increasing stratification of the university system will present a further barrier and disincentive to many such students. In this way the stratification of the tertiary sector reinforces that of the secondary sector and vice versa. Unless alternative polices are adopted we seem bound to continue with the situation where the more selective institutions mainly draw their student body from private schools and middle class households, while the less selective ones recruit more heavily from state schools, FE colleges, minority ethnic communities and working class households. This is not a recipe for increased social mobility.

Alternatives

The key to widening participation in higher education lies in policies to create a fairer and less fragmented school and college system. But direct steps should also be taken to reverse the stratification of higher education. As well as banning competition on fees and student aid packages, the existing severe disparities in funding between those institutions that regularly surpass their state school entrant benchmarks and those that regularly fall short should be addressed. It cannot be right that, even after allowing for differences in subject costs, Cambridge University should have more than four times the income per student of Edge Hill University (the differences in institutional wealth are even greater: the 24 members of the enlarged Russell Group own between them over half the sector’s total assets). Beyond that, universities and colleges should be required to devote a significant proportion of their resources to collective, locally focussed and coordinated efforts to work with schools, colleges, employers, local authorities and trades unions to raise aspirations and to improve progression to all forms of post-compulsory education.

QUALITY

Current Policy

Current policy is governed by the assumption that quality will be raised as universities compete on price (tuition fees), as well as quality and availability, and new providers enter the market, some of them private ‘for profit’ companies. Greater information for students – the Key Information Set (KIS) gives no fewer than 17 items of information for every undergraduate course including class contact hours and assessment regimes – will also strengthen students’ ability to demand and receive better teaching. Students will have a more prominent role in quality assurance and will even be able to trigger institutional audits (reviews) in certain circumstances. The QA regime will be made more effective by moving to a ‘risk-based’ approach whereby certain institutions with better ‘track records’ will receive less frequent or less intensive visits from the Quality Assurance Agency (QAA). The Government’s main funding agency, the Higher Education Funding Council for England (HEFCE) will become the principal (‘independent lead’) regulator with a particular brief to act as ‘champion’ of student interests.

Assessment

Although there is no conclusive evidence, there are strong grounds for suggesting that quality in UK higher education has fallen over the past 25 to 30 years, and that the main reason for this is that institutional revenues have not kept pace with student numbers; greater competition for students and revenue has almost certainly exacerbated this. It is therefore unhelpful that, according to the Institute for Fiscal Studies, under the current Comprehensive Spending Review higher education will suffer a 40 per cent per cent reduction in current spending between 2010-11 and 2014-15. There are four further sets of reasons for suggesting that quality is actually at greater risk from current policies.

First, a genuinely risk-based approach will almost certainly prove to be unworkable, as several experts have already warned. There is simply no secure basis for making the necessary judgements. Even in the more closely regulated school sector, a significant proportion of ‘outstanding’ providers fail to sustain the designation. Second, markets in higher education do not work like the markets of classical economic theory. Because of a combination of information difficulties and the role of universities in allocating status, they are ‘positional’ markets where price is a synonym for quality rather than a reflection of it, and where no competitive advantage accrues to universities that provide better teaching. Third, as the House of Commons Innovation, Universities, Science and Skills Committee found in its 2009 inquiry into quality, increased competition is already weakening the main means of protecting quality, academic peer review, without putting anything worthwhile in its place. Finally – and at least as long as anything like the present degree of competition continues – there are strong reasons of principle for arguing that the monitoring and regulation of quality should be done by an agency wholly independent of both the government and the sector if even present levels of quality are to be maintained.

Alternatives

It is unthinkable – at least in the current economic context – to return UK higher education to the funding levels it enjoyed prior to the great expansions of the 1960s, or even the 1980s. But a good start would be to aim at public expenditure on higher education attaining the same share of GDP as the leading OECD countries (at present only Japan has a lower share than the UK). It is also desirable to limit the share of teaching revenue that comes via the fee, and to prevent competition on fees, aid packages or fee waivers (see separate note on funding).

Beyond that, and assuming the continuation of strong competition for students and revenues, the existing regulatory apparatus needs to be strengthened, especially if we are to see a wider range of providers (our existing universities are both legally and practically ‘private’ providers, and there may be no secure way of keeping ‘for profit’ providers out). The QAA should be reconstituted as a statutory agency accountable directly to Parliament. It should be responsible for ensuring minimum ‘threshold’ standards. For this purpose, it should have the power to accredit (and de-accredit) all providers, whether or not they are in receipt of public funds (directly or via their students). The agency should report on how institutions are using their resources to maintain or improve quality. This should be the basis for an annual report to Parliament on quality and standards and what should be done to maintain them. The agency should continue to operate on the basis of academic peer judgements but there is also a case for considering whether there should be statutory protection for academics, and especially internal or external examiners, who find that their judgements are being overruled or interfered with by institutional managers for reasons of revenue or reputation.

Finally, whilst it may not be practical politics to cut back on the information now provided for students, efforts should in future go to improving the existing channels of information, advice and guidance for students at 14 and 16 plus, as several authoritative reports have urged, rather than into extending the existing, increasingly meaningless, categories further.

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