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It’s the autonomy, stupid: Augar, admissions and market signalling

  • 19 August 2019

This blog has been contributed by Professor Colin McCaig, Sheffield Hallam University.

With the publication of, and ongoing fall-out from, the Augar Review of Post-18 Finance, it has become clear that there is a surprising degree of misunderstanding about various aspects of the HE market established in England over the previous decade and a half. My recently published book The marketisation of English Higher Education: a policy analysis of a risk-based system (McCaig 2018) looks in detail at how the market developed over a thirty-year period and – like a lot of us policy wonks – I have been involved in or engaged with various events and publications on how Augar fits into the current situation and the historical context. 

Two things stand out: a misunderstanding of the importance of institutional autonomy over admissions in the market; and a wilful ignorance of how the HE market operates outside the Oxbridge – Russell Group bubble. To better understand the impact of applying certain market levers, it is essential to have a greater understanding of all the factors in play.  

Institutional autonomy

The autonomy of universities is generally misunderstood. Not understanding how important autonomy over admissions is to the way that institutional prestige is reinforced is one thing; but it is compounded if allied to the belief that pulling on any policy levers can override it. On the contrary, each of the sixteen pro-market policy documents I analysed in my book reiterated the inviolable nature of autonomy: it is literally enshrined in law (e.g. Further and Higher Education Act (1992); HMSO 2004; HMSO 2017). That is not to mention that various other adjacent policy reviews, such as the Schwartz Review of Fair Admissions to Higher Education (2004) which took autonomy as its starting point.

Yet a lack of understanding by policymakers, e.g. at the time of the trebling of fees in 2010 and later when the Coalition government established a ‘Social Mobility Czar’ in the form of Liberal Democrat MP Simon Hughes, was comprehensively exposed when the Office for Fair Access (OFFA) made it clear that, sorry, but it had no powers to use fee-regulation as a means to force institutions to lower their entry requirements in the way that Ministers thought.

This is far from a semantic point. Autonomy over admissions allows those institutions that can attract the best qualified to reinforce their position at the top of the status hierarchy and allows their representative body – the Russell Group – legal cover to ignore any attempts to truly open up HE opportunities for all. The Equalities Act (2010) prevents universities (or indeed any organisation) from discriminating against people on the basis of their protected characteristics (age, gender, ethnicity, beliefs etc); but the list doesn’t include social class, which – as we all know – is heavily correlated with educational attainment at all levels up to entry to HE. The presence of institutional autonomy alone creates the conditions for a differentiated distribution of HE providers based on the average Ucas tariff points required. It also forms the basis for the market ‘rationale’ that HE delivered by some providers is ‘more valuable’ in financial terms than that delivered by others. This puts current – and perennial – discussions about Post-Qualification Admissions and Contextual Admissions into their very non-radical context, as discussed in my recent WonkHE blog.

Market signalling: the Price List

Markets rely on signalling, in the form of simple, easy to understand messages indicating where the ‘good stuff’ is and what it costs. Even without tuition fees the currency of Ucas entry requirements is, and always has been, the primary indicator of differential ‘quality’ in the system. However, when institutional league tables first appeared in 2005 (the Times Higher Education was first off the mark) they also included a number of other key metrics including those associated with research (amount of research income; proportion of staff with Doctorates; proportion of PhD students) which bolstered the position of the most established universities. The combination of entry requirements and research power acts as a double-lock that reinforces the established hierarchy: and of course such a market-based fixed hierarchy benefits the current elite, who lobbied for variable ‘top up’ fees long before the introduction of basic flat-rate fees in 1998 (McCaig 2000).

The presence of unitary, linear league tables drives public perceptions of the range of HE providers, not least the perceptions of applicant-consumers and their parents. This does not take into account the various types of excellent HEPs that, for example are ‘specialist providers’ with high entry requirements that do not do any research or that have a specific mission (e.g. as part-time institutions like the OU and Birkbeck), some of the new alternative providers that offer just a few disciplines (such as law, accountancy etc) or indeed the host of post-1992 institutions that have a regional labour market focus and offer many highly-demanded degree programmes. 

The notion of a league table implies a homogenous set of institutions all doing the same thing, with the one in 99th position seen as the 99th worst at ‘being like Oxbridge’. This is absurd: the market for automobiles doesn’t pretend that a small hybrid car for use in a city is better or worse than a 3-litre luxury saloon with the turning circle of a small Oxfordshire village: it’s just different. Markets have to differentiate horizontally as well as vertically; league tables are entirely the wrong metaphor. 

But a lot of very clever, usually Oxbridge educated, people seem to believe the hierarchy is natural and such rankings reflect truths about the quality of education on offer and the inherently superior nature of applicant-consumers presenting with AAAA*s. That belief system may help the elites sleep at night – that all they are doing is providing a meritocratic pathway for the ‘brightest and best’, and keeping UK HE ‘globally excellent’ – but from the outside it looks like protectionism created by a rigged market. 

Philip Augar himself seems to have swallowed whole the idea that only the few are able to access degrees: as Simon Marginson said in a recent HEPI blog:

The report is harsh about the admission of students with low scores, suggesting that some universities do this solely to boost numbers without regard for the allegedly low value of the degrees to the individual and the economy. Unless universities get their house in order, says the report, a minimum academic requirement could be imposed.

And while Augar genuflects to the notion of widening participation, as Marginson says he is queasy about the logical consequences of a thoroughgoing WP approach, which necessarily must take in students without the conventional academic entry qualifications… and notes that Augar wants to have less degrees even as our international competitors expand and offer degree education at scale.

This set of a priori beliefs about the HE sector means that Augar is puzzled by the effects of the HERA regime on institutional behaviours. His comments about not understanding why some universities in are in financial difficulties suggests he doesn’t understand the incentives created by the removal of the numbers cap from 2015/16, nor the potential threats created by the encouragement of alternative providers and the ‘risk-based’ monitoring regime of the OfS designed to expose ‘failing institutions’. It is quite clear in the HERA 2017and the preceding White Paper (DfE 2016) that new providers are there to create price competition, and should surprise no-one (least of all a banker) that competitive behaviour involves sometimes risky borrowing for investment by providers: yet Augar just sees this as ‘bad management’ as if there is no market or market-effect.

4 comments

  1. albert wright says:

    An informative contribution to the debate.

    The autonomy of individual Universities is a timely reminder and must be considered by those, like me, who wish to see the OFS be more proactive.

    Market segmentation is essential to a better understand of the HE market and a ranking of 1 to 160 or so is unhelpful.

    When it comes to pricing and control, there may be nothing that can be done to make the local, community based, students staying at home institutions, lower their prices or change their admissions criteria unless they want to.

    However, it may be possible for the Government to restrict the loans to certain students taking certain courses at certain Universities to reflect the relative values perceived by students of the relevant degrees awarded that might be enough to achieve lower prices.

    The essence of a market is supply and demand and the possibility of prices coming down as well as going up.

    In our HE model, supply side costs may be beyond the remit of OFS but supply side cash flow via student loans may well be.

    I believe we have too many students going to University to take expensive degrees increasingly being funded by tax payers and burdensome loans that benefit the staff in Universities more than the students.

    We need more of a market not less. Augar rightly saw Community Universities being providers of Apprenitceships and other qualifications alongside (fewer) and less expensive degrees.

  2. Colin McCaig says:

    It would be possible for OfS to do as you suggest – but the prefered method at the moment seems to be to increase supply at lower price points (new providers) and the removal of any assumption that failing providers will be propped up. The fear of exit and cheap competition are the key mechanisms.

    But what policymakers (all Oxbridge educated naturally) don’t get is that there remains high demand for degrees even at low tariff institutions and at £9250 a year. Oxbridge and Russell Group types simply don’t understand the value of any other kind of higher education. The mystification of policymakers at the unintended consequences of their actions is one of the few pleasures still to be had in academia for me!

  3. Les Ebdon says:

    An excellent blog, clearly illustrating the tyranny of newspaper League Tables. League table position is much more important to those in say the top twenty than to those elsewhere. One Russell Group VC once complained to me about a fall from eighth to tenth and said it had triggered an early morning phone call from his Chair of Council whereas a 20 place drop was of no consequence in the lower reaches. Hence the determination of so many VCs near the top of the league tables not to dilute their tariff scores by contextual offers as these scores determine in large part league table position. This determination is reinforced by lively Departmental competition as to who has the highest average tariff score.
    It never ceases to surprise me that Ministers and the media should be surprised that market behaviours start to appear when this is what they were aiming to achieve, so why the fury over conditional unconditional offers, large marketing budgets or populist courses? Signalling is another clear outcome of marketisation. In the absence of reliable information about comparative quality (and there never will be as quality can only be assessed years after delivery) price has become a surrogate for quality (just as it is in handbags). So everyone charges the top price allowed as there is no downside. What a student eventually pays does not depend on the level of course fees but on the level of their salary on graduation. Students are smart enough to work this out, even if some media commentators are not.
    Higher education should be governed by professional ethics and not market forces.

  4. Oliver says:

    I agree with some of what you say Les, but I think it’s entirely reasonable for VCs to act in the way you suggest, even if League tables really measure some real and important variable.

    1) Universities in the middle of the league table are much closer together than those at the top of the league table (e.g. in the Complete University Guide, the standard deviation for the top ten is 38 points (/1000). For 70-79th, it’s 7 points.

    2) I also think you’re overly pessimistic about measuring quality. The external examiner system probably isn’t fit for purpose, but it would b perfectly feasible for a large proportion of subjects for an external group to look at examination papers and double blind mark them. Control for prior qualifications of the student, et voila, you have a reasonable measure of learning gain.

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