John Cater is the longest-serving Vice-Chancellor in UK higher education, having been in post since 1993. He recently announced his intention to retire next year but, in the interim, could not resist the opportunity to look at the challenges facing the sector he has been part of for five decades…
The challenges facing higher education in the United Kingdom are writ large, in academia, in the specialist media and now, increasingly, spread across the pages of the national press. Some, including those in the sector, have called for radical reform, others have used it as an opportunity for sniping, perhaps forgetting that the (rightful) expansion of the sector dates back to the Conservative Education Acts of 1988 and 1992, not simply the Blair reforms of the late 1990s.
An incoming Government has a range of priorities – Health, Social Care, Housing, possibly Defence – that outflank the needs of Education, and, within the DfE, it is understandably difficult to make the case for higher education above early years, or further education, or compulsory schooling.
The sector did not claim the system was broken in 2012, so it is hard to argue that it is broken now. It is, however, increasingly inadequately funded. With a pragmatist and an incrementalist now installed in Downing Street, we may be well-advised to focus on what may be achievable broadly within current frameworks. Would the following steps help avert a crisis:
- Index link the tuition fee. Everyone accepts that costs increase. And every cost in higher education has increased, except the tuition fee. No University will invest in staffing, equipment, facilities, new programmes without a degree of certainty. Announcing even a small two-stage increase from, say £9250 to £9550 to £9850, initially staying below the politically-sensitive £10k figure, with a review in 2027, would be a decent first step.
- Re-introduce a ‘soft’ cap. Choice matters, and universities should be subject to market forces. But there is a strong argument for managing that market if we are to help ensure anchor institutions survive and can succeed. The removal of the Student Number Cap in 2015 had deleterious as well as positive effects. Acting rationally, selecting universities rushed to recruit to low-cost subjects, distorting both provision and geography. A ‘soft cap’, restricting an individual provider’s student number growth in a static market to no more than, say 5% per annum, would lessen the pace of the shift towards the perceptual elite, allowing time for others to adjust. The speed of change we are seeing this year – early projections from Data HE for 2024/25 suggest a ten per cent increase in home recruitment by high tariff institutions and a 3-4% drop in mid- and low tariff universities – a 14% switch in a single year, verges on the unmanageable.
- Save BTEC. The incoming Government has, already, wisely decided to shelve proposals for an Advanced British Standard. T levels are highly credible qualifications, but the availability of sufficient high-quality placement opportunities will never make it a generic qualification. The status of A-levels remains, but State schools and colleges and pupils from less privileged backgrounds have increasingly and rightly turned to BTEC as an appropriate mix of academic and vocational skills and an appropriate route into university. In turn, many of those universities most deeply embedded in supporting their local communities depend on students recruited with BTEC qualifications.
- Increase the Strategic Priorities Grant. It might, just, be possible to deliver a classroom-based programme for something close to the £9250 fee if you have critical mass, but a laboratory-based programme will see little change from £14,000 or more. Given this, universities’ investment in STEM subjects (and other high cost provision, such as the Creative and Performing Arts), is inevitably under threat. If the State wishes to prioritize certain disciplines, the gap between funding and cost needs to be narrowed significantly.
- Open up the USS to all Academic and Academic-related staff. How do you reduce the labour cost of delivery in post-1992 universities by almost a seventh? The employers’ contribution to the Teachers’ Pension Scheme, which post-92 institutions are obliged to offer to all incoming academic staff, is 28.68% on top of salary; the employers’ contribution to the Universities’ Superannuation Scheme is 14.5%. On a £100m academic staff salary bill that is a difference of £14.2m. There are obvious challenges – a funded scheme versus an unfunded scheme, a private sector versus a public sector pension provider, but calculating transfer values and/or mixing individuals’ pension pots is commonplace elsewhere. Worth exploring?
- Increase take-home pay… The opening up of USS to all would have financial benefits for individuals too. A USS contributor pays 6.1% into the investment pot, a Grade 9 TPS contributor pays, on average, 9.6%. The difference would add over £1500 to the TPS salary before tax.
- Increase the Student Loan… The challenging fiscal climate hardly makes the reintroduction of the student grant feasible, but the maximum student loan is increasingly divorced from the cost of living. Probably one for the ‘too difficult’ box, but is there an argument for setting the maximum student loan, a full State pension and the tax threshold at exactly the same figure, £12,570, and have an agreed GDP deflator each year?
- Manage Student Accommodation Costs. The sector is increasingly dependent on third party, quoted or private equity providers of residential accommodation. Whilst intuitively attractive, rent controls could have a deleterious impact on supply. Given this, a better alternative is to increase availability, through quicker and easier planning processes, and the rapid release of brownfield and grey belt land.
- Revisit Loan Repayment Terms. It is fair that those who have benefitted from higher education should contribute, when earning above a threshold, to the cost of that education. But the re-basing of the repayment threshold and the changes applied to interest rates have led to high earners and those from wealthier backgrounds repaying quickly, minimising interest payments, whilst those on low/mid earnings, such as teachers, nurses, social workers, pay more and for longer. Reviewing interest charges, even if the 40 year term and the £25,000 entry point remains, would be more equitable.
- Forgive Fees? Recruitment to the Health and Education professions is spiralling down and retention falling through the floor. For political reasons, the Government is reluctant to facilitate international recruitment of labour, particularly for social care, and we face a workforce crisis. First raised in the Times Higher in October 2014 as a possible response to the political bind Labour and the Liberal Democrats found themselves on tuition fees, with wider recent coverage (see, for example, Palmer et al (2023)), student loan forgiveness costs “look highly affordable compared with some other workforce policies and interventions”. The write-off of (largely irrecoverable) debt after a decade of service should boost recruitment, retention, job satisfaction and, after a decade, provide a net income boost. It is well worth considering.
And now, the urgency. Many universities are already severely challenged, and 2024 recruitment patterns are likely to exacerbate this, particularly given the sizeable fall in international numbers and the market-level fees they bring. For several, fire-fighting is replacing strategy and investment. But the real crux is yet to come. From 2030 to 2038 the eighteen-year-old age cohort (2012 and 2020 live births) falls from 729,674 to 613,936, a decline of 15.9%. If we do not have a sustainable sector by the end of this Parliament, for higher education the next decade could be cataclysmic.
Reference:
Palmer, Rolewicz, Cater, Conlon and Halterbeck (2023), Student Loan Forgiveness, Nuffield Trust, London.