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Augar and the Four Horses

  • 12 June 2019
  • By Johnny Rich

A guest blog kindly contributed by Johnny Rich, CEO of the outreach organisation Push

At the start of the Augar Review, the panel set out their eight guiding principles. Number four is:

“The cost of post-18 education should be shared between taxpayers, employers and learners.”

I agree, but, it seems, the panel itself didn’t. Reading the Review – which is in many ways a fine and thoughtful document – among its fifty mostly welcome recommendations, I cannot find a single one about how employers should share the cost.

It could be argued, with some fairness, that employers do share the cost of higher education by paying a premium salary to graduates and a small proportion of employers pay apprenticeship levies. However, if you count the graduate wage premium as an employer contribution, you might just as well also count public funding as contributions indirectly paid largely by graduates and employers through tax. It is all the same money revolving on an economic merry-go-round.

It matters whether contributions are direct. If they’re not, what is Augar’s argument against Labour’s proposal to foot the entire bill by raising tax on profit-making corporations and on higher earners, many of whom are graduates. If you allow indirect contributions, general taxation is certainly one way of sharing the cost.

Direct contributions to the cost also matter if you want those who contribute to be able to influence the provision of post-18 education. We only have to remember the White Paper that heralded £9,000 fees, which was called ‘Students at the heart of the system’, suggesting that, through higher fees, students would gain more say in the range and quality of provision. Or you can look at apprenticeships, which are explicitly “employer-led” and employer-funded.

In Fairer Funding, a Policy Briefing paper published by HEPI last December, I argued that higher education is like a cart with a horse hitched to each corner. The four horses are the four key stakeholders: students and graduates; society (through the government and taxpayer); employers who need graduate labour; and the institutions themselves.

The current funding system – and its forebears since at least the early 90s – sets these horses’ interests in competitive opposition. If one wins, the others lose.

As the horses pull, the cart might stay where it is: a happy but unlikely compromise arising only if the interests happen to cancel each other out. The cart might be pulled in one direction as the pony that is the student interest, for example, gets tugged backwards and ends up paying an ever-greater contribution. Or – and this is the almost inevitable outcome eventually – the cart may be pulled apart.

The cart gets pulled apart quite regularly. Over the past three decades, the funding system of higher education in England seems to have a ‘best before’ date of about seven years, before it is subjected to a review and/or a White Paper, and the horses are reset.

The Augar Review even seems to hint at its own mortality. It argues that the real terms reduction in funding to universities would be manageable thanks to the growing pool of 18-year olds until 2025. It almost implies that a longer view isn’t worth taking.

The inevitability of the review cycle will persist as long as we do not hitch all the horses to the front of the cart. The funding system should harness them by incentivising their common interests rather than their competing ones. Everyone agrees students should be well-taught, fulfilled individuals in fairly paid jobs, supporting a cohesive society and economy.

To align the interests, my paper proposes a graduate levy, broadly equivalent to current student debt repayments, paid by the employer based on each graduate employee’s earnings. This money would be channelled directly back to the graduate’s place of study, giving the institution a stake in their students’ long-term future through providing the kind of rounded education that fosters resilient and flexible employability.

In order to forestall the advantages of recruiting only students with pre-existing social capital, I propose a National Access Fund – not dissimilar to the Augar proposals on redistribution of funding based on supporting group underrepresented in HE – which would shift money from those who fail to meet access targets to those who exceed them.

I cannot claim that my proposal would resolve HE funding once and for all, but I am sure that with the horses harnessed appropriately, not only is the cart safe, but it can move forward better and its direction can adapt as needs change. Indeed, the same funding mechanism would work for further education too.

On the other hand, for all its thoughtfulness and many good ideas on level 4 and 5 qualifications, lifelong learning, access, and much else, the Augar Review will one day fail because its solution to the problems it was set has mostly been to twiddle the knobs in the hope of finding a fairer setting.

A reduction in the price tag of fees is largely immaterial. It is only really relevant to the minority of graduates who might one day repay their entire debt. Presentationally, however, it is thought to matter, but even this benefit will prove marginal. Those students who might be put off by fees of £9,250 and debts of around £55k are unlikely to have their minds changed by a repackaging as £7,500 and a ‘contribution’ running to 1.2 times those fees plus whatever they have borrowed for maintenance. They may even spot that the increasingly complex repayment terms have become more regressive.

Rather than aligning interests so that everyone wins, the Augar proposals ensure everyone feels they’ve lost.

A review is an opportunity for a radical ripping up of the rules. Augar may have delivered that for FE, but for HE funding, it is tentative tinkering and, if the government decides to implement the recommendations haphazardly (picking the cuts and ignoring the costs), the repair of the system may leave it more broken

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