A blueprint for marketising Higher Education

When the 2010 election presented the three parties with a closed door, the Tories and Lib Dems opted to come in through the window. Upon entering the house, they discovered someone had been having a pretty wild party for 13 years. At first they seemed intent on doing some serious spring cleaning. But now the aprons and dusters are gone and the crash helmets and drills are out. Like it or not, our once tranquil house is now a construction site for a radical renovation project: the effective marketisation of our higher education system. David Willetts – the foreman of our narrative – must navigate a difficult path in the coming months and years to see his project through safely.

The first problem he faces is the elephant in the room: the cost to the public purse. With most
universities intending to charge the maximum annual fee of £9000, the burden upon the government to provide appropriate bursaries will be huge. Ironically, none of this will show up on the public balance-sheet because student loans are not technically public spending at all, but rather a ‘hypothecated income stream’. In plain English, the Government isn’t spending money ‘permanently’ since it expects to recover most of the money directly when the loans start to be paid back – hence it isn’t public ‘spending’ but rather public ‘loaning’. This is one particularly creative way of avoiding difficult questions about the Coalition’s commitment to reducing the deficit.

{{ quote The Government isn’t public ‘spending’; rather public ‘loaning’, in its approach to fees }}

The second problem is less vulnerable to definitional manoeuvring. The Government has already indicated that there will be no relaxation of supply-side restrictions involving student admissions – in essence this means that universities will still be subject to a cap on the number of places they can offer to students. However because of reductions in teaching grants and restrictions on student visas, these institutions will be heavily squeezed to provide the same quality of education without the additional income from more students or even increasing the proportion of ‘cash-cow’ international students.

Tackling this squeeze while maintaining a market-agenda is not an easy task. One option for the
Government could be to allow universities to take on more students provided the students provide up-front payment for their education. The dangers of this are that this could encourage a market of ‘risk’ because these up-front students provide definite payments while many of their loaning counterparts will not pay back the full costs of their fees thanks to the Lib Dems’ concession of delaying repayment rates for lower-income students. A safer option being considered is to create a pool of extra university places which the institutions then compete over, creating incentives to offer better value for money on their courses.

{{ quote Institutions will be heavily squeezed, having to increase numbers of ‘cash cow’ international students }}

A third problem for the Government is keeping the Further Education sector afloat so that it can provide competition from beneath. However since these institutions rely on universities to validate their degree courses, the pressure on the latter could simply end such arrangements and force the closure of courses at FE colleges – reducing the effective number of competitors in the market. If the government tries to create new avenues for colleges, there will be the additional concern of maintaining high standards of academic credibility for degrees.

The current legislation regarding degree-awarding powers is rigorous and, at present, private
providers must renew their right to issue degrees every six years. There are signs that the
Government may be moving towards expanding these powers. The private examinations board,
Edexcel, is one candidate that could be endowed with the power to award degrees and prop up further education colleges. But with 85% of academics in a recent survey expressing doubts that
private institutions can live up to the academic rigour of existing public institutions, this will be a difficult hurdle to overcome.

And all the while A.C. Grayling and his A-Team of academics are taking the first steps to adapting to this new climate – allowing domestic students to effectively compete with international students for places. If Willett’s grand designs proceed according to plan, this precedent may well be followed.

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