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Finishing Unfinished Business

  • 3 April 2014

With thanks to Julian Gravatt, Assistant Chief Executive of the Association of Colleges, who is our second guest blogger.

In Unfinished business, Nick Hillman makes the case for a higher education bill and identifies some priorities. He suggests action is needed to control new student loans properly, secure fairer competition between established and new institutions and improve the student complaints system. There’s a long list of specific recommendations and government will need a detailed set of laws to address them. Unfortunately it’s actually more complicated than Nick outlines. Three more issues that need to addressed are higher skills, financial continuity and VAT. 

Higher skills is an area where OECD detected a weakness in the English system. There’s a need and a demand for more. We don’t just have a binary divide between universities and alternative providers; we have a multi-dimensional shape with different types of universities and FE colleges offering higher education.

There have always been mixed economy colleges; it is just the mindsets and regulatory arrangements that have not properly adapted to deal with this for 25 years. There is a messy division between the higher and further education sectors which has developed over time but which also results from university and college responsiveness. When some universities expanded their postgraduate, international and knowledge transfer activities, they left behind sub-degree higher skills which have been filled by FE colleges. There is growing interest in higher apprenticeships but peculiar rules for supporting them from the public purse are limiting their expansion. Legislation that addressed this, perhaps involving an HE regulator with a broader remit, might help.

Financial continuity is another issue. Nick outlines obstacles that make it harder for new providers to enter the market but there are also issues surrounding possible exit. Established universities and colleges are saddled with pension debts that don’t trouble newer institutions. Debt may yet bring down a new or incumbent institution and, if it does, the recovery arrangements have not been tested. Weaknesses in the protection of the student interest go beyond complaints, to cover continuity issues.

The third issue, VAT, is a minefield for all who enter it. Nick notes the Treasury proposal in 2012 to equalise VAT treatment and also notes that no progress has been made. I think it will take something bigger to ever tackle the problem because VAT law is enmeshed in EU directives and affected by compromises between Whitehall and the devolved administrations. VAT has caused trouble in education for decades. Whether we get an HE bill or not, I confidently predict it won’t solve the VAT issue.

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