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What happened to the masterplan? The relationship between government and higher education

  • 7 August 2023
  • By Chris Millward
  • This blog was kindly authored for the HEPI 20th Anniversary Collection by Chris Millward, Professor of Practice in Education Policy at the University of Birmingham.
  • In August, we are running chapters from the Anniversary Collection as a series of blogs. This piece is the third chapter from that collection.

There was certainly a plan. Some said it was scrawled on the back of a beer mat or a cigarette packet. It was more likely to have figured on a blackboard in Sanctuary Buildings, though that could have been in words, a chart or a formula. A public version of it – the White Paper The Future of Higher Education – was published in January 2003 and led to the Higher Education Act (2004).1 Neither of these, though, captured the real plan being discussed around the kitchens of Northavon House and Polaris House, which was a sector modelled on the best state higher education systems in the USA.2

A masterplan for English higher education

Every region would have a flagship research university, to be achieved through mergers. Other universities would focus on applied research and professionally-oriented teaching, developing ‘third stream’ engagement as their first mission. Through joint ventures and college networks, universities would open in counties and towns without provision. There would be new medical schools and Foundation Degree qualifications designed around the needs of employers across the country. The government would support universities to recruit an extra 50,000 international students by 2005.

The Government could broker this through the Secretary of State for Education’s relationships with the most influential higher education leaders. The Chief Executive of the Higher Education Funding Council in England (HEFCE) had served as a vice-chancellor, President of Universities UK and Chief Executive of the Economic and Social Research Council. When he left HEFCE in 2006 for a further vice-chancellor position, he was replaced by another vice-chancellor who had served with the Research Councils.3 By that time, the senior civil servant responsible for higher education was also a former vice-chancellor. Due to the Labour Party’s control of the devolved administrations in Scotland and Wales, as well as central government in Westminster, and the commonality of approaches between the English, Welsh and Scottish Funding Councils, there could be a coherent policy UK-wide.

The new configuration of universities and colleges would improve access to and pathways through higher education, creating the vision of the Prime Minister, Tony Blair, of a knowledge economy ‘open and genuinely based on merit and the equal worth of all’.4 Increasing public spending could be justified by the promise of returns to the Exchequer from graduates and research driving productivity through businesses and public services.

This plan would though, in practice, need investment and mechanisms for delivery. The Prime Minister would provide political support for an increased tuition fee cap for domestic undergraduates of £3,000. Through the 2002 Spending Review, the Treasury would increase HEFCE funding from £5.1 to £6.3 billion and overall research funding from £1.9 to £2.6 billion between 2002/03 and 2005/06.5 HEFCE’s funding, allocated to 289 universities and colleges in 2003/04, would mostly be distributed as block grant, but through strategic development funding and additional student numbers, its Regional Consultants and their counterparts in Regional Development Agencies could align national priorities with local needs.6 This would leverage university borrowing, further education capital, land from local authorities and NHS placements and facilities.

The accountability relationship between government and universities would become known from 2005 as a ‘single conversation’, through which the annual guidance from government and grants to institutions, underpinned by a Financial Memorandum, were intended to provide assurance on all aspects of public investment.7

Fragmentation of policy in practice

In 2023, the relationship between government and higher education is neither ‘single’ nor a ‘conversation’. Oversight of education and research is split between the Department for Education (DfE) and the Department for Science, Innovation and Technology (DSIT). The Office for Students (OfS) serves the interests of tuition-fee paying consumers as the regulator of around 410 English higher education providers.8

Research continues to be substantially funded by government grants, with the largest sums allocated by UK Research and Innovation (UKRI), but it relies on institutional investment to maintain global standing, which is largely derived from international student recruitment. The current Conservative Government oversees most research funding across the UK and the regulation of higher education in England, but different approaches are deployed for funding and accountability by the Scottish National Party in Scotland and the Labour Party in Wales.

UKRI and its constituent Research Councils continue to be led by senior researchers with connections across their subject areas. The Office for Students has a more distant relationship, applying the same conditions to universities, further education colleges and for-profit providers. Its duties and functions, set out in the 2017 Higher Education and Research Act (HERA), consider neither the needs of different places nor the coherence of provision, creating instead the conditions for student choice and provider competition.9

The OfS Board is chaired by a peer and former MP who follows the Government whip, and it contains more lawyers and school teachers than academic staff and students. Quality regulation is delivered by the OfS itself, rather than through the sector-owned Quality Assurance Agency (QAA). Whereas HEFCE received an annual grant letter, the Government issued 24 guidance letters to the OfS between its formation in 2018 and 2022.10 These letters set expectations for regulation and funding, but also pose challenges to higher education providers on their culture, standards and outcomes.

There can be tensions between the regulatory, funding and planning approaches deployed by different parts of government. It is difficult, for example, to align the allocation of research and postgraduate funding by UKRI, and the planning of services and placements by NHS Trusts, with the supply of graduates based on choice and competition. This can hamper the delivery of policies to increase research and innovation across the regions, and to meet NHS workforce demand.11

The level and complexity of consultation and evidence required for regulatory activity, which imposes obligations, is greater than is needed for funding, which provides conditional support. As a result, reforms to quality and free speech regulation, which have been promoted through guidance and legislative change since the current Government’s election in 2019, remain in progress in 2023.12

In February 2018, the Prime Minister announced the Augar review of post-18 education, with a similar aim as the Labour Government 15 years earlier: ‘to connect everyone to a sense of fairness and opportunity’.13 The review reported in May 2019, but the Government was unable to agree its response until February 2022. This was a policy statement rather than a White Paper detailing the reforms throughout tertiary education advocated by the review group.14 During the four years between commissioning and response, there were two Prime Ministers, three Secretaries of State and four Ministers. By 2023, responsibility for implementing the response had passed through three Prime Ministers, five Secretaries of State and three Ministers.

Towards a new settlement

There are many legacies of the Government’s plan for higher education in 2023. They include: a single flagship research university in Manchester; universities in Suffolk, Cumbria and Cornwall; medical schools in Plymouth, Brighton and Hull; and higher education centres in Burnley, Blackburn and Oldham. There is a national survey capturing the experiences of over 300,000 students each year, an embedded source of data and funding for civic and commercial knowledge exchange, and an established Research Council for the arts and humanities.15 The former Labour government’s target for 50% of the young population to participate in higher education was achieved in 2017/18 and international student numbers have increased well beyond its ambitions.

In 2003, there were 86,000 academic staff and 1.98 million students in English higher education, supported by income of £14 billion, of which 25% was gained from tuition fees.16 By 2021, income levels had increased to £37 billion, 56% from tuition fees, and this supported 194,000 academic staff and 2.43 million students.17 Universities have a greater footprint than ever before, both directly through the people studying and working in them and the expansion of their estates, but also indirectly through their influence on jobs, migration and investment and the expectations and values of young people.

The pattern of expansion has not, however, followed the 2003 plan. HEFCE could neither force mergers on autonomous universities nor require them to offer specific types of provision in particular places. While securing funding for local collaborations and focussed missions, universities developed their own strategies to meet the diversity of demand for their education, research and services locally, nationally and internationally.

The Government’s ability to plan higher education diminished further following the 2007 banking crash and the coming to power of a Conservative-Liberal Democrat Coalition committed to deficit reduction from 2010. That new government increased the domestic undergraduate tuition fee cap to £9,000 from 2012, facilitated by the replacement of £3 billion in teaching grant with repayable loans. This implemented advice in the Browne review, which had been established by the Labour Government, that graduates should make a greater contribution to the cost of higher education.18

The Coalition Government did not, though, follow the review’s recommendation that it should legislate for a single body responsible for the Government’s investment in higher education through student finance, teaching grants and research funding. Through the 2011 Students at the Heart of the System White Paper, it positioned choice and competition as the drivers of higher education provision.19 This, coupled with the removal of student number controls and guidance in 2015 from the Competition and Markets Authority, set the pattern for structural changes introduced by HERA to be approved by a Parliament with a Conservative Party majority following the 2015 General Election.20

At this point, the relationship between the Government and higher education appeared to reflect the balance of public and private interests. Through repayable loans, some of which would be written-off, the Government shared with graduates the cost of their education. OfS regulation would provide baseline levels of assurance on issues of shared concern to students and taxpayers. Research continued to be financed largely by the Government, so it would be shaped by UKRI as a strategic funding agency that would enhance coherence across the Research Councils and stimulate private investment.

This settlement changed in 2018 with the decision of the Office for National Statistics (ONS) that the predicted student loan write-offs should feature in the public spending figures.21 The new situation was also, however, influenced by the public character of higher education beyond the level of spending, which yields intervention even by governments committed to market forces.

This was clear from the arguments within successive governments about constraining visas for international staff and students, and the extent to which the Government determined the delivery of higher education during the Coronavirus pandemic. It was also exemplified by the result of the 2016 Brexit referendum, which reflected the uneven distribution of the benefits among people and communities of the pursuit of a knowledge economy, based on higher education expansion and open labour markets.22

The demand-led expansion of English higher education has been characterised by consolidation and concentration around full-time full-degree studies. This contrasts with the 2003 plan for mission differentiation, through which universities would move out to communities and employers across the country, rather than bringing students to their own campuses. The proportion of students entering part-time and above the age of 21 reduced from 34% to 12% between 2008/09 and 2019/20, and the proportion entering part-time for a qualification below a full degree from 23% to 4%.23

Further education colleges, which are more likely to be based in post-industrial and coastal towns where there are low levels of higher education participation, experienced larger cuts to funding than other areas of education during the period of deficit reduction from 2010.24 Places with universities and high-levels of higher education participation not only improved opportunities for their local populations, they also attracted people and investment from other areas. This led to a concentration of wages and highly skilled jobs across the country, and the polarisation between graduates and nongraduates was apparent in the Brexit vote and after.25 

These patterns, coupled with stalling productivity growth and tuition fee expenditure rising beyond £10 billion, have increased the Government’s appetite for intervention.26 But it has weak levers due to the separation of its oversight between different aspects of higher education and its reliance on student demand and fee income to shape the pattern of provision.

In 2023, our system is too large, plural and public to be planned by vice-chancellors or controlled by regulation. We can, though, work towards a better relationship between the government and higher education, more joined-up engagement across institutions’ education, research and civic missions and ultimately more common goals.


  1. Department for Education and Skills, The future of higher education, January 2003 pdfs/2003-white-paper-higher-ed.pdf and https://www.legislation.
  2. The Department of Education (DfE) is located at Sanctuary Buildings in Whitehall; Northavon House was the headquarters of the Higher Education Funding Council for England in Bristol; Polaris House is the location of the UK Research Councils in Swindon.
  3. The Secretary of State for Education in 2003 was Charles Clarke, MP for Norwich South. The Chief Executive of the Higher Education Funding Council was Professor Sir Howard Newby, formerly Vice-Chancellor of the University of Southampton and future ViceChancellor of the University of the West of England and of theUniv ersity of Liverpool. Newby was replaced by Professor (now Sir) David Eastwood, formerly Chief Executive of the Arts and Humanities Research Board and Vice-Chancellor of the University of East Anglia, and future Vice-Chancellor of the University of Birmingham. The Director General for Higher Education in the Department for Education by that time was Professor Sir Alan Wilson, formerly Vice-Chancellor of the University of Leeds.
  4. Tony Blair, ‘I Want a Meritocracy, Not Survival of the Fittest’ commentary, Independent, 9 February 2001 https://www.
  5. Higher Education Funding Council for England, Recurrent Grants for 2002-03, 2002; Higher Education Funding Council for England, Recurrent Grants for 2005-06, 2005; Department for Education, The Future of Higher Education, 2003, p19
  6. Higher Education Funding Council for England, Recurrent Grants for 2003-04, 2003
  7. Higher Education Funding Council for England, Accountability for Higher Education Institutions: Consultation on a New Process, 2005
  8. Office for Students, The OfS Register, 2023.
  10. Office for Students, Guidance from Government, 2023
  11. HM Government, Levelling Up the United Kingdom, 2022 https://assets. attachment_data/file/1095544/Executive_Summary.pdf; The King’s Fund, NHS Workforce: Our Position, 2022 uk/projects/positions/nhs-workforce
  12. Department for Education, Guidance to the OfS: Secretary of State’s Strategic Priorities, 2021 media/48277145-4cf3-497f-b9b7-b13fdf16f46b/ofs-strategicguidance-20210208.pdf
  13. Theresa May, The Right Education for Everyone, 2018
  14. Department for Education, Higher Education Policy Statement and Reform Consultation, 2022 https://assets.publishing.service. file/1057091/HE_reform_command-paper-web_version.pdf; Department for Education, Post-18 Review of Education and Funding: Independent Panel Report, 2019 https://assets.publishing.service. file/805127/Review_of_post_18_education_and_funding.pdf
  16. Higher Education Statistics Agency, Resources in Higher Education 2003-04, 2005; Higher Education Statistics Agency, Students in Higher Education 2003-04, 2005
  17. Higher Education Statistics Agency, Higher Education Provider Data: Finance, 2023; Higher Education Statistics Agency, Higher Education Staff Statistics: UK 2021-22, 2023; Higher Education Statistics Agency, Higher Education Student Statistics: UK 2021-22, 2023. Figures are for the latest year available, which is 2020- 21 for income and 2021-22 for staff and students.
  18. HM Government, Securing a Sustainable Future for Higher Education: an Independent Review of Higher Education Funding and Student Finance, 2010 uploads/system/uploads/attachment_data/file/422565/bis-10-1208securing-sustainable-higher-education-browne-report.pdf
  19. Department for Education, Higher Education: Students at the Heart of the System, 2011 uk/government/uploads/system/uploads/attachment_data/ file/31384/11-944-higher-education-students-at-heart-of-system.pdf
  20. Competition and Markets Authority, UK higher education providers – advice on consumer protection law, 2015 https://assets.publishing. data/file/1159863/_HE_providers_-_advice_on_consumer_ protection_law___.pdf
  21. Office for National Statistics, New Treatment of Loans in the Public Sector Finances and National Accounts, 2018 economy/governmentpublicsectorandtaxes/publicsectorfinance/ articles/newtreatmentofstudentloansinthepublicsectorfinancesandnationalaccounts/2018-12-17
  22. Sara Hobolt, The Brexit Vote: a Divided Nation, a Divided Continent, 2016
  23. Office for Students, Number of UK-Domiciled Students to English Higher Education Providers 2006-07 to 2019-10, 2021
  24. Office for Students, Low Areas of Young Participation by Parliamentary Constituency, 2020; Institute for Fiscal Studies, Annual Report on Education Spending in England 2022, 2022 publications/annual-report-education-spending-england-2022
  25. Henry Overman and Xiaowei Xu, Spatial Disparities Across Labour Markets, 2022
  26. Department of Education, Skills and UK Productivity, 2023; House of Commons Library, Higher Education Funding in England, 2021 https://

1 comment

  1. Albert Wright says:

    I am surprised and concerned to see that :

    In 2003, there were 86,000 academic staff and 1.98 million students in English higher education, supported by income of £14 billion, of which 25% was gained from tuition fees.16 By 2021, income levels had increased to £37 billion, 56% from tuition fees, and this supported 194,000 academic staff and 2.43 million students.

    How, over 20 years, can the number of academic staff more than double from 86k to 194k and yet the number of students only increase from 1.98 million to 2.43 million (0.45 miiillion)- a mere 23%?

    The ratio of staff to students has reduced from 23 to 1 to 13 to 1. So much for productivity, or are all the extra staff now doing research?

    I can only agree that “In 2023, our system is too large, plural and public to be planned by vice-chancellors or controlled by regulation.”

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