A policy tutorial

It’s a far cry from rioting students surging past the imposing buildings of Millbank. On the University of Reading’s leafy campus, young people sit on the grass soaking up the sun, supping cold drinks and listening to a brass band. The only signs of aggression are to be found on a nearby football pitch, where young men chase a ball while holding stripy poles between their legs. It turns out they’re playing quidditch – the game, based on one played on flying broomsticks in the Harry Potter novels, is among those being showcased to prospective students at the university’s open day. 

Four years after demonstrators smashed their way into the Conservative Party offices in Westminster during a protest against the coalition’s tuition fees hike, the students in Reading appear to have accepted university education’s shift from public service towards consumer product. Sixth formers from the Cotswold School in Gloucestershire tell CSW they’re looking carefully at the courses to make sure they get their money’s worth, but seem relaxed about the prospect of having to pay their loans back. Current students are worried about the debts they’re building up – and focused on choosing modules that will improve their chances of earning enough to repay them – but they seem more angry when we discuss printing costs in the library. Even the president of the Student Union, Mark Kelleher, strikes a determinedly moderate note: he “can see why the changes were introduced”, he says.

The government’s changes to higher education funding – raising fees from a maximum of £3,000pa to £9,000, whilst cutting university teaching grants – presented the coalition with one of its first major tests. Lib Dem MPs had pledged before the election to vote against any rise in fees, and 21 of them did so in the 2010 Commons vote. Ministers, who were largely following the recommendations of the Browne Review – set up in 2009 by the Labour government – argued that the changes would make higher education funding more sustainable as student numbers rose and the public finances weakened. 

Accompanying reforms to the allocation of public higher education funding and the rules around alternative education providers would meanwhile introduce more competition into the market, government argued. 

In a bid to ensure that poorer families weren’t deterred from going to university, the coalition reformed the loan repayment schedules and obliged universities charging higher fees to create access agreements – approved by the Office for Fair Access (OFFA) – designed to encourage applicants from non-traditional backgrounds. 

The new system came into force in 2012, badly damaging the reputation of the Liberal Democrats – who had not only performed a dramatic U-turn but also required their most senior departmental minister, business secretary Vince Cable, to push the policy through. So, two years on, how has the policy worked out on the ground? Has it achieved its objectives – and where its performance has been weak, which flaws in policy or delivery have tripped it up?

Although the £9,000 cap was designed for use in “exceptional circumstances” – with most universities charging up to £7,000 – in the event almost all are imposing the higher fee. In the 2014-15 academic year, 72% of universities plan to charge the maximum fee, and average fees across the sector will be £8,650, according to OFFA.

Nonetheless, these high fees don’t appear to have deterred full-time students. In 2012, applications to university from British 18-year-olds fell by 10% – and the fall was higher in England than in Scotland, Wales and Northern Ireland, where fees remained unchanged. However, in 2013 numbers rose again, and in 2014 the proportion of English 18-year-olds applying to university was at its highest recorded level. What’s more, a report by the Higher Education Funding Council for England (HEFCE) noted that applicants from disadvantaged backgrounds were more likely to be accepted to university in 2013 than 2012, so the gap between numbers of advantaged and disadvantaged students attending university is narrowing.

There are causes for concern, however. The number of part-time undergraduates fell by 46% between 2010-11 and 2013-14 – something that’s particularly worrying because part-time study “challenges social inequalities,” according to a study commissioned by the Department for Business, Innovation and Skills (BIS). The review, carried out by sector association Universities UK, noted that 44% of part-time learners are the first in their family to access higher education, and 29% are from low-income groups. One problem appears to be that many part-time students are not eligible for loans. And while course fees are becoming unaffordable for individuals, in a tight jobs market employers are less likely to sponsor or permit their staff to take on part-time courses: the HEFCE found that rates of part-time study have fallen furthest in the North-East, where unemployment is at its highest.

Back on Reading campus, there’s more evidence that higher fees have changed students’ expectations. Union president Kelleher says one of the biggest impacts is that of “students taking their studies more seriously.” He points to a big fall in the union’s takings at its Wednesday club night, accompanied by a small rise on Saturdays: “Students are saving money to go out at the weekend because they want to wake up for their Thursday morning lectures,” he says.

Meanwhile, some humanities academics fear that the need to repay loans will push students towards science courses with more direct application in the jobs market. One literature lecturer at a university in southern England tells CSW of her fears that arts and humanities courses will become “elite subjects” – affordable only to those with less need to earn back their fees – whilst the cuts to public funding, which have fallen most heavily on the humanities, will lead to UK-based research drying up.

Meanwhile, student expectations appear to be rising: these days Reading’s union is helping more students to submit complaints about teaching standards – indeed, it would like to hire a second adviser to handle the rise. And this trend is reflected nationally: academic appeals and complaints to universities rose by 10% between 2010-11 and 2012-13, according to Freedom of Information requests submitted by the BBC. 

Faced with changing student expectations, universities are working harder to provide attractive services. Reading’s vice-chancellor Sir David Bell – formerly the permanent secretary at the Department for Education – shows CSW around the main campus, pointing out that the library recently started opening round the clock. We move past the campus supermarket – run by the Student Union – and a newly-refurbished central food court. Reading is opening three new halls of residence this September, and recently renewed its existing halls. Across the country, says Bell, universities are trying to ensure their facilities are top-notch to attract students. “It sometimes feels to me a bit like an arms race, where everybody’s spending more,” he says. “But it is perhaps a good illustration of the competitiveness in the student market.”

“Each university is trying to find a particular place for itself: aspects that make it stand out,” he continues, as we approach a white dome standing in fields behind the Student Union. It’s full of stands manned by staff and students, showcasing the university’s courses and services. Prospective students can also attend events in individual faculties to find out about their courses, or wander around enjoying the band, the quidditch, the cheerleading, the fencing, and a host of other activities designed to heighten people’s impressions of the university. 

Director of marketing Gem Walsh says 6,000 prospective students are expected to visit the two-day event, adding that the focus has changed from previous years. “Our open days were [previously] less about the student, and more about what the university thought it should be doing,” she says. Walsh, another former civil servant, joined the university in 2012 and has concentrated its marketing on trumpeting the quality of the student experience. At Reading station students are handing out free bus tickets, whilst around the campus red flags bear words such as ‘Limitless’ and ‘Learning’. It all reflects what Walsh calls an “unprecedented marketisation” of the sector over the last five years, with change happening incredibly fast. “I’m used to working in Whitehall, where the pace of change is constant and full on,” she says, but “I’ve never known [change] anywhere like it is here.” 

Universities’ marketing efforts have, Walsh adds, intensified since the government’s abolition of the cap on the number of students each university can accept – a surprise change announced in the 2013 Autumn Statement. People might have expected the cap to be removed eventually, she says, but “24 hours before, we’d been speaking to colleagues in government [and] no-one seemed to know anything about it. It was such a shock to the system”. 

The changes have come in quickly, too: this September’s intake will be uncapped, creating greater competition and uncertainty for institutions. “You can’t now rely on a guaranteed number of students in the same way that you used to,” says Bell.

Yet despite the increased focus on marketing, Reading’s marketing budget remains largely unchanged at £2.8m – of which £1.25m goes on staff pay, reports Walsh: the £250,000 earmarked for her new campaign is a one-off investment. For although students are paying three times as much for their courses, the reductions in public funding mean that on average universities are getting just 12% more money per graduate, according to the Institute for Fiscal Studies. Universities are also investing much more of their own funds into that facilities and estates “arms race” of which Bell spoke: HEFCE analysis in 2014 found that though capital grants fell by 64% between 2008-09 and 2011-12, the sector plans to invest around a third more in its estates over the next three years than it did over 2010-13.

With calls on university funding rising far faster than receipts, says Bell, “universities now have to be thinking about how they can diversity their income.” Reading is fortunate to have an “enormous, non-operational land bank” he says, made up of valuable land near the M4: it recently secured planning permission for a 12,000-home development. It’s also expanding overseas – in September, it will open a campus in Malaysia – and, like many universities, it’s trying to increase its numbers of foreign students, who pay higher fees. 

In April, a HEFCE study showed a decline in foreign undergraduates studying in the UK, for the first time in 29 years – a particular problem given that fee income from international students represents 30% of universities’ tuition- and education-related income. Last year, Reading recruited more international students than ever; but across the country, falling numbers are a real threat.

Many universities blame the government’s tightening of visa rules, particularly those covering visitors from India, for creating the impression that overseas students aren’t welcome in the UK. Indeed, Nick Hillman – a former special adviser to business minister David Willetts, who steered through the reforms, and now the director of think tank the Higher Education Policy Institute (HEPI) – believes that the UK is not “offering as positive a message to students as we should be.” He adds that “we’re playing in a very competitive market” in which burdensome visa requirements can easily deter potential students. However, he takes heart from the fact that Tory MP Jo Johnson, head of the Prime Minister’s Policy Unit, has written that students should be treated differently from other migrants. “There are people at the heart of Number 10 interested in this.” Hillman comments.

Hillman is also concerned that government has not delivered the full set of legislative and regulatory changes envisaged in the 2011 white paper Students at the Heart of the System – largely because the traumatic process of passing the original laws left both coalition partners eager to move on. In his first paper for HEPI, Unfinished Business, he wrote that “the political tension caused by higher tuition fees may have been a factor in the blocking of new higher education legislation,” and argued that changes to funding without subsequent changes to the regulatory framework have left both with shortcomings.

The regulator HEFCE is short of powers, Hillman argues; and because government hasn’t managed to create a level playing field for all HE providers, we aren’t yet seeing the full potential benefits of a more diverse and competitive sector. “Some future government will have to look again at overall regulation of higher education,” Hillman tells CSW; and Bell, while careful not to advocate a greater burden of regulation overall, agrees that “you need to have a common regulatory plain” for all providers. 

The regulatory system, it appears, is not yet in its final state. But this may also be true of funding – for it turns out that introducing higher fees has not saved the government as much money as ministers had anticipated. A study by the Institute for Fiscal Studies, published in April, estimated that lower than expected graduate earnings mean that government will have to write off 43p in every pound loaned to students – in which case, the overall savings will be tiny: just 5% of the previous higher education budget. The government originally said it expected to write off 28% of loans, but this figure has been gradually revised upwards until in March the estimated write-off stood at 45%: if it hits 48%, the new system will save no money at all.

Hillman is understandably keen to defend government on this count, rejecting the idea – put forward by the NUS in particular – that changes in calculations suggest government pushed through the changes on ideological rather than fiscal grounds. The calculations, broadly the same as those used in the Browne review, are based on long-term projections and “big assumptions” about future earnings, he says, and are bound to fluctuate. At some point analysts from government and think tanks might discuss why BIS’s projections were wrong, he says. Most people agree that a slower than expected economic recovery has played a part, but it could also be down to the forecasters’ use of average earnings figures: these hide huge variations among graduate incomes, with increasing numbers of self-employed or freelance graduates. Whatever the contributing factors, says Hillman, the main challenge now is to address the policy implications of the fact that student loans cost more than ministers expected. 

Bell also believes that “an urgent piece of business for whoever’s elected at the next election will be to set up a process to identify how we’re going to make the public funding system more sustainable in the medium term.” He emphasises the need to get buy-in from all political parties, saying that changes to fees should not happen “by mere administrative fiat”. The Browne review, he believes, “was a good process that brought that cross-party consensus,” and while it is his “confident prediction that nobody will commit themselves to a process this side of the election,” he clearly anticipates that politicians will return to the funding question after May 2015. 

If university fees do change again soon after the election, it will be the third major change to fees in just over a decade: having introduced them in 1998, Labour increased the cap from £1,000 to £3,000 in 2004. Yet Hillman recalls that, when he was working on the policy in BIS, one of his biggest frustrations was the department’s “lack of implicit knowledge, or institutional memory” about the policy. Very few officials who’d worked on the 2004 changes were still in the team, partly because the policy had moved departments twice in the intervening years. 

Given the near-certainty of policy reforms after the next election, officials who’ve joined the higher education funding teams since 2010 may find it worthwhile to get back in touch with their predecessors – whose plan, delivered to the sound of smashing glass on Millbank, never fully emerged into the light of day. These big coalition reforms appear to have been enacted without much damage to the UK student body – at least amongst the full-timers – but the questions raised over funding projections suggest that the goal of putting higher education on a more sustainable footing may not have been realised. Meanwhile, the reforms’ slightly unfinished nature has left the system uneven, and the Home Office’s visa policies have given foreign exports a knock. These points will need addressing soon, and with as much consensus as possible. For as Bell notes, the UK’s higher education system is “one of the country’s great assets internationally. So we generate too much uncertainty at our peril.”