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The OBR responds to HEPI on student numbers

  • 7 August 2015

In mid-July, I blogged on the seemingly ever-changing forecasts from the Office for Budget Responsibility (or OBR) on future student numbers, which can be read here.

The OBR has treated that blog as a formal ‘request for further detail’. I wholeheartedly welcome their willingness to respond to my comments and their response can be read here:

But, while their clarification is welcome, it ignores the point that it would make sense for the OBR to start considering evidence from abroad (particularly Australia) when assessing the potential impact of the removal of student number controls on future student numbers, as well as to talk to higher education institutions about their current plans for the future.

There is also a strong case for the OBR to consider the potential for further growth in recruitment from the European Union, once number controls are removed, as well as to dig out the story of the UK’s own past experience of relaxing the rules on the recruitment of students. Some of this is discussed in a paper we published last year.

By not doing such things, the OBR are forcing themselves into a position in which they regularly publish precise estimates for future student demand that are characterised by spurious accuracy and which bounce around from publication to publication. They are currently predicting that the number of new students will grow by 3,000 in 2018, 1,000 in 2019 and 1,000 in 2020.

On the other hand, by opting to take a very limited number of factors into account (essentially, demographics, application and acceptance rates) they are forced to state that there is ‘uncertainty associated with these estimates [which] means they are likely to continue to be subject to revision in future forecasts’. In other words, they accept their figures are likely to be proved wrong.

While no forecast can be forever and no one has perfect foresight, I personally think there are good grounds for believing that the OBR’s forecasts will turn out to be overly precise and overly pessimistic. That matters because it affects the modelling on the costs of higher education in the future.

I reiterate how impressive it is to see the OBR engaging with this debate, but I can’t help thinking that constantly recalculating a figure while using such limited inputs is not a particularly useful exercise. Wouldn’t it be better for the OBR to apply their forensic approach to a true unknown where more digging would truly benefit policymakers – like the RAB charge for part-time students.

This is likely to be the last blog post for a while, due to summer holidays. So good luck to everyone waiting for exam results that could determine the next stage in their lives.

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