This blog was authored by Rose Stephenson (@rstephenson123), Director of Policy and Advocacy at HEPI.
Chris Parr, Senior Editor at Research Professional News, asked me last week what I wanted to see from a new Labour Government. I replied with (I hope) a considered and pithy quote for an article in Research Fortnight.
But Chris’s question got me thinking – beyond what could be captured in a short paragraph. What do I want to see from the Labour Government in relation to higher education?
Firstly, I want a proper, grown-up conversation about what the UK Government wants the English higher education sector to look like. (As a reminder, education policy is devolved, so the new Government in Westminster will only be making changes to the English system. The Scottish and Welsh Governments and the Northern Irish Assembly make policy decisions about higher education in their own jurisdictions. Research funding is still partially determined nationally. However, this blog primarily focuses on the funding of undergraduate teaching.)
Do we want a world-class higher education system? HEPI recently published a report by Edward Venning: Down with the world-class university: How our business models damage universal higher education.This report set out that the ‘world-class’ model is damaging the sector. The paper has some important points, including the damage caused by chasing league table positions, the inflexibility of the three-year, full-time degree model, and the insistence that you cannot be a world-class higher education institution without undertaking world-class research.
Being ‘world-class’ is often associated with institutions appearing in lofty positions in world university rankings. There are clear benefits to achieving this for the sector and the country, not least the economic benefits of welcoming international students. But how useful are these rankings as drivers for what we want higher education to be?
Perhaps swapping the term ‘world-class’ for ‘high-quality’ is more helpful. The government has its own drivers of quality, operationalised by the regulator in England, the Office for Students. While it is with great hesitation that I suggest adding to the regulatory burden, the new Government needs to consider whether they want higher education to remain high-quality and, if so, what this looks like through a Labour lens and how this should be measured. The future shape of the higher education sector is a political choice.
We are in the early days of this new mission-led Government, and three of these five missions are to:
- kickstart economic growth;
- make Britain a clean energy superpower; and
- break down barriers to opportunity.
Higher education can play a crucial role in each of these missions, and perhaps considering higher education policies through the lens of these missions will help the new administration to define the sector’s direction.
This brings me to the second part of the grown-up conversation: you can’t continue to have a high-quality system when you knowingly diminish investment in that system.
Therefore, to maintain previous levels of investment, greater input is needed. This can be done through raising tuition fees (this is politically very difficult, although fee levels have recently risen in Wales to match the fee level in England), increasing funding from the public purse (economically challenging – but bear with me for a reframing of this) or from employers (you can read more about the graduate-employer levy in this HEPI report but a levy on business may clash with the Chancellor’s mantra of growth).
Currently, in England, Government write-offs of student loans are seen as a system failure. The higher education system failed to produce graduates who could earn enough to pay back 100% of their loans. Or the student failed to choose a course that would result in a high-salaried job. However, this framing suggests that almost any public investment in higher education is a failure. Why is it that in England we don’t see state investment in higher education as necessary?
In Scotland, where the Scottish Government covers the cost of tuition (albeit for a capped number of students) the exchequer investment in each student is 113% of the cost (as this includes the cost of some loan write-offs). In Scotland, this is framed as an investment in higher education, in students and in the future prosperity of the country. In Northern Ireland, where there is also a student number cap, the public purse covers 51% of the cost of higher education, and in Wales, where there is no student number cap, the public purse covers 44% of the cost of higher education.
If we reframe this ‘failure’ as investment, the UK Government is investing just 16% of the cost of higher education, a much smaller amount than its UK counterparts. The rest falls on the shoulders of graduates. The Barnett formula – the calculation that determines the block grant from Westminster to the devolved nations – determines that the devolved nations have increased funding for public services compared to England. In 2021/22 the overall identifiable spending per person was 18% higher in Northern Ireland, 17% higher in Scotland, and 13% higher in Wales than in England. However, the disparity of proportional investment in the higher education sector remains notable.
The investment of public funds should, of course, come with an expectation of value for money. There is a case for efficiencies in higher education providers. However, when the cost of teaching home undergraduates has seen a ~30% real-terms cut, expecting further efficiencies without an impact on quality is a bit ‘head-in-the-sand’. Some institutions have been able to use international student recruitment to fill this void. However, continuing with the status quo will lead to a two-tier, self-perpetuating system of quality. Institutions with ample reserves, buoyant international recruitment and generous donations will be able to invest in research, staff:student ratios, student support, and capital-building projects – including accommodation. Those without alternative funding streams will eventually be forced to deliver education on a shoestring budget. (As a former secondary science teacher, I speak from experience when I say this is not where we want much of our higher education system to end up.)
Labour is politically well-positioned to recapture the idea of higher education as a public good and make the case for why investment is needed. And while I would like to see continued investment in the higher education sector, what I want more than that is for Labour to front up to the issue. Either the investment will be forthcoming. Or it won’t and there should therefore be an explicit redirection of the sector towards fewer teaching hours, bigger staff:student ratios and a narrowing of institutional expectations – and an understanding of how this can be managed across the sector. Perhaps this is a naive ‘want’ of policy over politics, but it is frustrating to see an ongoing expectation that the sector will remain high quality, even world-class, while it faces an unmanaged (by recent governments at least) economic decline.
All boils down to ‘the politics of higher education’ – the balance of public social good v private consumption good. Aware of only one study of what that balance might be as calculated by a US economist (Mahon) – after a lot of equations and graphs he (rather feebly/predictably?1) concludes 50:50 taxpayer subsidy v student/family input (but that input to include the earnings foregone by the S while in HE). So, some parts of UK sort of there – England not at present. But the politics if HE must also address priorities and vfm for the taxpayer – HE a weak contender in times of austerity v schools & hospitals. I would hope the Government – before writing blank cheques for VCs – demands really radical reform of an HE delivery system based on the Medieval University model!
I agree there seems to be diversity in how each nation funds HE
The main trade off is capped numbers v no cap
England should have capped numbers to keep total spending down
Alternatively all Universities should cease to be state funded and left with an open market
Excellent and thoughtful reflections, Rose.
Thank you also for referencing my graduate employer levy proposal. To be clear, though, it would potentially *reduce* employers’ labour costs, not increase them, so it would be a stimulus for Labour’s plan for growth, not a drag on it.
To explain: currently employing a graduate costs whatever their salary is plus tax/NIC. Of their salary, 9% of everything over £25k goes straight to the Student Loans Company, nominally as the graduate’s loan repayment, but since the money never even passes through their account, the fact that it’s them paying is, practically speaking, abstract.
Under my proposed Fairer Funding levy, the graduate would pay 3% (as a repayment on their maintenance loan); and the employer would 3% (as the graduate employer levy).
That leaves 3% that does not need to go to the SLC at all. The employer can give this to the graduate which would raise their take-home pay without it costing the employer any more. Or the employer can pay 3% less to attract staff in future on the assumption that equally good candidates will be equally likely to do the job for the take-home pay that they would have been getting under the current system.
My hope and expectation is that in most cases the labour market would resolve it (no active decision necessary) such that the employer and graduate would end up splitting the difference and both would be marginally better off.
But, importantly, there’d be no reason for this to cost businesses more in the short to medium term.
It’s true that, because the levy wouldn’t be time-limited, in 40 years’ time, businesses would still be paying 3% that, under current system, would be written off (at the expense of the taxpayer), but, to be frank, I think that 40 year should be enough time for employer (a) to plan for a future where their most highly-valued staff might cost them 3% more in real terms than 40 years previously, and (b) if they really don’t think grads are worth the extra 3%, to train non-graduates.