Comment: By creating a market for universities, the government has snookered itself
Professor Sir Keith Burnett, President and Vice-Chancellor of the University of Sheffield, discusses the current challenges facing the higher education sector.
By creating a market for universities, the government has snookered itself
By Professor Sir Keith Burnett, 7.9.17, published by The Guardian
The government has a problem. Open any newspaper or turn on the news and there are items about the cost of universities and the burden of debt on students, at levels higher than the cost of most of their parents’ first house.
People are complaining about universities at a time when the present government thought it had the issue sorted. The creation of a full-blown market for higher education with its own regulator – the Office for Students – heralded by the recent Higher Education and Research Act, is now nearly complete. The theory was that competition amongst the hundred or more existing universities, and a raft of new commercial providers, would hone the system to perfection.
What’s more, with an Ofwat-style regulator in place to protect the rights of students, our political masters were supposed to have a buffer between them and those who opposed the legislation, leaving them free to get back to the endless grind of the Brexit negotiations.
So why has there been such an outburst of negative university stories over the summer? And why is the clamour getting louder, despite further evidence from this week’s Times Higher rankings that this is one sector in which the UK is truly world-class – home to thirty-one of the planet’s top 200 universities?
It isn’t just the chance to poke fingers at the salaries of senior staff. Universities have joined the OfGang. We saw the same dynamic a generation ago when private water and energy companies began charging for what had once been seen as a public service: endless stories quickly followed of price fixing, gouging, fat-cat bosses, poor service, and a lack of concern for customers or communities.
Of course, university tuition has never been free, any more than healthcare is free. But public funding through general taxation made it feel that way. Now that most students have to take out a loan for both tuition and accommodation, their attitude to that service is changing. Add to that compound interest rates of up to 6.1% per cent, and no guarantee that the government won’t change the terms again over the next thirty years, and suddenly to many education feels like a burden as well as a liberation.
Surely it must be good, ministers argue, that students have to think about what they are paying for. Won’t the search for value for money put pressure on providers to up their game? Times certainly have changed. Students can choose a place of study informed by a plethora of league tales, including a new mark of student outcomes, the Teaching Excellence Framework.
But the government is now reaping the consequences of this so-called market that it does not appear to have anticipated.
The first is the loan system itself. Ministers designed a system generous enough in its repayment terms to incentivise as many students who can find places to go to university, removing the fear of debt if the expected graduate salary premium fails to materialise. Particularly when the alternatives to university are so poor, many more students apply than they did when funding to universities effectively limited numbers. As a natural consequence – more graduates seeking a limited number of well paid jobs –the number of people who fail to repay loans has increased, and so the government needs to charge a hefty interest rate from the higher earners to cover losses from those who will never pay.
So why not change this? Because the government has given away control, is ideologically committed to creating a profit motive to incentivise private players, and so is forced to stiff the students who do repay their loans.
And why doesn’t the government simply force universities to reduce the fees? From the outside the assumption is that they must be coining it.
Only ministers know that this isn’t true. Tuition fees simply replaced lost government funds and public grants for labs and state of the art teaching facilities have also long gone, replaced with a – possibly temporary – injection of international student income. If the government were to slash fees, it would effectively force some universities to the wall. That was the reason for allowing fees, frozen for the last four years, to rise with inflation.
How the government would respond to a situation in which a young person is forced to change institution halfway through a degree, or finds themselves with a degree certificate from a university which no longer exists, is not clear. But universities are not airlines or travel agents: the consequences of institutions collapsing could ricochet across many thousands of lives. And we know which institutions are the most vulnerable – those that are a lot less likely to teach the children of government ministers.
What’s more, the government knows that the science and engineering courses crucial to the future of the UK economy cost more to deliver than even the present tuition fees. They know cross-subsidy takes place across subjects, and would not want universities to save cash by closing the very costly departments that the UK needs to compete in advanced technologies. Yet this is exactly what pursuing maximum financial returns would suggest is the right thing to do
There are other risks which don’t cause as much voter pressure as fees but should worry our political masters.
If the Brexit vote is taken to mean a demand for fewer immigrants, policymakers could seek to control statistics by reducing the numbers of international students on whom universities, and the towns and cities in which they are based, now so heavily depend.
There is also the risk that hard-strapped universities may not have the financial flexibility to play the role of anchor institutions in their regions, drawing in other sectors and jobs. Yet it is clear that research and innovation is absolutely vital to the industrial strategy that Britain needs so badly - especially after Brexit.
So at every turn, in an effort to create a marketised system of mass higher education, the government has snookered itself.
How to respond? Well, tempting though it is to say we told you so, this is too important for universities themselves not to seek solutions in the interests of the students and graduates who are at the heart of why so many scholars become teachers. We have all sorts of clever people in universities who specialise in thinking about knotty problems. And we sure as hell need them now.
Many have never thought of education as just one more service industry. They think instead in terms of purpose, vocation and public benefit. And they feel a duty to those they teach that lasts for decades after graduation.
What would those people say? Like all good scholars they would want to go back to fundamentals and ask who and what are universities for? What kind of society, economy and democracy will emerge if we get things right? Such an approach would incorporate evidence from all quarters, not only those who directly experience higher education.
If only politicians had the luxury of asking important questions and patiently, humbly seeking answers. But then we citizens and voters are the creators and purchasers of headlines and politics. If there is going to be any kind of enlightenment, it will have to begin with us.