House of Commons - Innovation, Universities and Skills

Select Committee on Innovation, Universities and Skills Third Report

3 Impact of the policy change

33. As the Minister implied in response to our question about the lack of consultation on the ELQ changes,[58] it is a dilemma of policy formulation that, when resources are switched, those suffering the loss can often immediately measure the effect and they usually have the means to express their disapproval whereas those gaining from the switch may not even be aware of the gain nor have a vehicle with which to express their views. Nevertheless, it is important that the impact of the policy change is properly understood by the Government and it is clear that this particular policy will have a significant impact on the higher education sector.

Part-time students

34. At the centre of the debate on the withdrawal of ELQ funding is the effect that the changes will have on part-time students. In the consultation document on the ELQ proposals issued in September 2007, HEFCE said "we are aware of the potential impact of the withdrawal of funding for ELQs on part-time provision. Our modelling shows that part-time students are disproportionately affected by this change in policy. We are concerned that this may threaten the short-term viability of some part-time provision". In order "to ensure that new […] entrants do not find their opportunities for part-time study suddenly reduced", HEFCE proposed:

to introduce a £20 million supplement to the part-time targeted allocation. This funding will be introduced in 2009-10, which is the first year in which the ELQ policy will have a significant sector-wide impact. Institutions will be able to use this money to support courses that are particularly affected by the withdrawal of funding for ELQs. In the longer term, institutions may wish to ensure the sustainability of their part-time courses by applying for non-ELQ additional student numbers, securing other sources of income (including fees), or through a process of rationalisation. This supplement will be subject to review in 2011-12.[59]

35. The Government has an improving record on part-time students. The Minister reminded us that this was "the first government ever to bring in a part-time student grant" and that "two years ago we increased the value of that by 27%".[60] He considered that "part-timers and more mature students are likely to be significant gainers through that process [of re-directing £100 million from ELQ students], but it is also the fact that we are increasing higher-education funding by 2.5% above inflation during the course of this [Comprehensive Spending Review], so there will be further opportunities to make good on the part-time front".[61] He accepted, however, that the ELQ proposals had an impact on part-time provision and he announced during the evidence session that the £20 million supplement available through HEFCE would be increased to £30 million.[62]

36. The higher education sector did not share the Minister's view of the Government's generosity towards part-time education. Professor Latchman of Birkbeck College said that funding for part-time students was "inadequate". He pointed out that several years ago HEFCE had commissioned a report from JM Consulting which reported that on a full-time equivalent basis the costs of part-time students to the institution could be up to 44% more than regular students.[63] Professor Latchman continued:

We get a 10% premium for that under the current system and your round figure of £20 million will raise that to 13.1%, so that is 13.1% against existing extra costs of 44%, or around there depending on the level of the course, and so that is entirely inadequate. We have been arguing for better support for part time [students] for umpteen years. It is ironic that it is only coming at this moment to the background of huge damage to the part time sector.[64]

In a supplementary memorandum Professor Latchman pointed out that the premium had remained unchanged at 10% for at least five years and that, when a review that HEFCE had set up to examine the effect of top-up fees for full-time students on the part-time sector recommended an increase in the part-time premium in January 2005, this had been rejected by HEFCE Board.[65] The allocation of £30 million would increase the part-time premium to approximately 15%.[66] UCU was concerned about the broader impact of the withdrawal of funding on the education of part-time students. It feared "that the ELQ funding changes will result in a permanent loss of staff expertise in working with adults and part-time students at the HE level".[67]

37. We saw no convincing evidence that part-time students would gain from the redistribution of funds away from ELQ students. We welcome and endorse the priority, and funding, that the Government has given to part-time students to improve their skills and we recognise that the Government has made improvements in support for part-time students. However, overall support for part-time students remains precarious and we conclude that these proposals are in danger of undermining improvements and current progress.

CO-FUNDING WITH EMPLOYERS

38. While the Government acknowledged that the withdrawal of ELQ funding would affect part-time students and was prepared to make some adjustments to the package, the main plank of its policy was to look to employers to co-fund programmes.[68] As the Minister put it, "there needs to be a cultural change and it needs to be based on co-financing".[69] He explained that the Government, with employers, needed to make changes "so that people will actually invest".[70] The Minister drew attention to 15 projects that HEFCE was funding across the country on co-financing initiatives and to the funding package of "at least £100 million during the course of the next [Comprehensive Spending Review] period for co-financing initiatives with employers" that had been announced in December 2007.[71] In addition, he also wanted "levers within the system" to enable, and to ensure, that universities prioritised the recruitment of those students within the workforce who were not yet at first-degree level.[72] The implication to us was that the Minister was applying the carrot of extra funding with the stick of the withdrawal of ELQ funding to achieve the policy of greater co-funding by employers. Later in the session he acknowledged that co-funding would not provide universal funding and said that "for those people who are with an employer who will not invest in them, there are other routes to reskilling that we are protecting within this process".[73] Specifically for the self-employed, he said that there would be "routes through the system to ensure that you can re-skill, for example in respect of vocational foundation degrees, which […] should become the trademark qualification for people who are looking to change careers, and a whole series of subjects which are exempted".[74]

39. The higher education sector did not share the Government's belief in co-funding by employers. Birkbeck College said that many students "will not tell us who their employer is because they are studying to move on"[75] and individuals who made submission to our inquiry confirmed that they had studied, or were studying, an ELQ in order to re-train or develop their careers.[76] The OU said that in a survey of ELQ students, 12% received some support from their employers and 9% had full support and that this "does not change a pattern we have seen over many years".[77] Professor Gourley from the OU explained that:

a lot of students are actually studying to escape present employers not necessarily stay with present employers, and we also have to accept that most people nowadays do not have one employer and one career, they have four, five, six different careers over a lifetime, and the economy is offering them all sorts of different kinds of careers and they have to up-skill and re-skill to take advantage of that. Employers have no particular interest in supporting that.[78]

40. These comments illustrate how the ELQ debate can be seen as a surrogate debate about the involvement of employers funding higher education.[79] It is clear, however, that, as a result of £100 million switch in resources, much of the funding given by one hand of government to assist part-time students will be taken by the other from those studying ELQs part-time. The result of the policy may be that, with an increased reliance on co-funding, employers will have greater influence over the choice of courses part-time students take. Those who are self-employed or who work for small or medium sized businesses will have reduced opportunity of co-funding. We have therefore concerns that the withdrawal of ELQ funding will remove the flexibility in the system that allows individuals without employers' support to acquire new skills to be able to change employment and meet the needs of a changing economy.

41. The Government is itself a major employer, particularly through the Civil Service, the National Health Service, the Armed Forces and education. Given the pressures for professional development we expect that many government employees will seek to study for qualifications which are at the same or lower level to ones that they already hold. They will become ELQ students faced with fees unsubsidised through HEFCE. We conclude that the Government needs to publish its policy as an employer on funding its employees' fees when they become ELQ students.

Disproportionate effects

42. A broad range of concerns was raised with us about the effects of the withdrawal of institutional support for ELQ students, especially that the effects would not be felt evenly and that certain groups, sectors and areas of study would be penalised disproportionately. Ms Tumelty from the NUS was worried about the impact on equality, particularly on women who had career breaks and who might need to improve existing, or acquire new, skills before going back into the workplace, which, she added, "is a really important issue seeing as women students make up 62% of part time students, so they are going to be massively disproportionately affected by this decision".[80] The UK Resource Centre for Women in Science, Engineering and Technology and the Women's Budget Group shared NUS's concern. They pointed out that the withdrawal would:

disproportionately impact on women as part time learners, and students of ELQ degrees because women as a group earn less or have less access to financial support;
deter people (mostly women) who have had a career break (often for caring reasons) or have followed unconventional career paths, from undertaking re-skilling;
undermine programmes and courses specifically for returners; and
work against government strategy and funding to encourage women in Science, Engineering and Technology (SET) as many potential learners were currently outside the SET labour market and were often in part-time jobs that did not utilise their technical qualifications and where employer support for their re-skilling was unrealistic.[81]

43. Other witnesses claimed disproportionate effects of the withdrawal of the ELQ funding would be felt by disadvantaged groups, traditionally under-represented in society, and by other groups, disciplines, institutions and localities. Here are some examples.

Groups

44. Skill: the National Bureau for Students with Disabilities was concerned about the effect the withdrawal of ELQ funding would have on disabled people who either became disabled after finishing their degree, or whose impairment or condition deteriorated to such an extent that they could no longer pursue their original career.[82]

45. Million+, which represents post-1992 universities, said that the London institutions in the 22 identified by HEFCE as losing the most funding as a result of the ELQ changes were some of the most successful in recruiting black and minority ethnic students.[83]

Disciplines

46. The British Computer Society argued that the ELQ changes would deter graduates in other disciplines from making a switch to IT. It explained that IT was vulnerable to a change in ELQ funding because of the small numbers inside the industry with existing IT qualifications combined with high growth rates in the industry. One option currently for those who did not have a first degree in IT was to take a qualification at the same level as their existing one.[84]

47. The CBI considered the "most damaging consequence of these plans" would be the impact on management programmes, especially MBAs, when it was essential for firms to compete in the global economy.[85]

48. Oxford University explained that it worked with theological training colleges to provide advanced academic, yet practical, theological courses. The majority of students were ordinands who already held an undergraduate or postgraduate degree in another subject. The churches were unlikely to be able to meet the increase in fees, and salaries in the churches were not at a level where such students could afford full-cost fees themselves. If the ELQ policy were implemented, the university considered that it was "highly likely that these courses will close".[86]

Institutions

49. The Institute of Education, University of London, drew attention to the effect of the withdrawal of ELQ funding faced by subject specialist institutions, especially institutions with a disciplinary focus which often served predominantly postgraduate students. It said that the nature of specialist institutions and their markets was inherently less flexible than that of multi-faculty providers.[87]

50. We have in this report noted in some detail the submissions of two "specialist" institutions, Birkbeck College and the OU.

Areas of the country

51. The London Chamber of Commerce and Industry said that the changes would have a negative impact on London's businesses. Reducing support for ELQs would inevitably discourage people in London, where there was a shortage of certain skills, from re-skilling or seeking additional qualifications.[88] LondonHigher doubted that large companies in London would invest in higher education, since the economic and cultural benefits of working in the capital meant that recruitment was often global. Hence there was little incentive for employers to upskill or retrain staff as opposed to seeking overseas candidates with appropriate higher level skills, to the detriment of London's work force.[89]

Impact assessment

52. In the consultation document published in September 2007, HEFCE said that it was:

concerned to ensure that our plans for implementing the ELQ policy do not impact negatively on any particular sub-set of the student population. This is particularly important given our statutory duty to have regard to eliminating unlawful discrimination and promoting equality (particularly in relation to gender, disability and race). Respondents to the consultation are invited to comment on any such unintended consequences. We will use this information to inform our assessment of the ELQ policy on the sector and, where possible, to take mitigating action.[90]

53. We are concerned that HEFCE was not able to carry out the assessment before embarking on the consultation exercise. We assume that it was constrained by the tight timetable set by DIUS. We are disappointed that HEFCE appears not to have pressed the Government to allow it to carry out a full impact assessment study. We recommend that in future before embarking on major changes such as the withdrawal of ELQ funding, the Government ensure that a full sector assessment of the impact of the proposals is carried out and the results published with consultation exercises.

54. By the time that we took oral evidence in January 2008, HEFCE had conducted a full sector impact assessment on "the whole range of equalities issues" which it intended to publish.[91] The Minister and HEFCE were both reassuring about the alleged disproportionate effects of the policy. For example, the Minister told us that of the 20 million adults within the workforce who were not yet at Level 4,[92] ten million of them were women and that two and a half million women were qualified to A-level but did not go on to degree level.[93] Professor Eastwood from HEFCE added that the assessment showed the impact of the withdrawal of ELQ funding was a "marginal differential" between men and women.[94] On students with disabilities, Professor Eastwood said that his "advice is that there are no particular issues relating to students with disabilities"[95] but he would keep the "matter under review".[96] On the effect on post-1992 universities, Professor Eastwood said that there was a differential compared to other universities "but it is not a huge differential" and "a significant part of the redistribution of numbers will be redistribution towards widening participation".[97] He added that further analysis would be done by institutions because it was institutions that determine the distribution of block grant.[98]

55. We are surprised that Professor Eastwood quoted from an unpublished assessment. His points conflict with many of the submissions offered to our inquiry. We recommend that HEFCE publish the sector assessment of the impact of the policy of withdrawing funding for ELQ fees as soon as possible, in order to facilitate further analysis where necessary.

Data used by HEFCE for modelling

56. When it carried out the consultation exercise in September 2007, HEFCE published models of the impact of the ELQ changes on individual institutions.[99] The statistical projections made by HEFCE to calculate the level of grant to be withheld from higher education institutions as a result of the implementation of the ELQ policy were based on historical data. Oxford University found HEFCE's approach "troubling".[100] It pointed out that universities had collected and returned data on students and their courses in 2005-06 in good faith and according to the requirements of the Higher Education Statistics Agency (HESA) coding manual. The data had not been collected and returned with a view to underpinning the ELQ policy and was unsuitable for the purpose. Oxford considered that something in excess of £1 million was included within the calculation of teaching grant to be withheld which, in its judgement, should not be included. It explained:

The data returned to HESA for 2005-06, while appropriate in terms of the requirements of that exercise, misrepresent the number of ELQ students in that university's population from the perspective of the new policy. Our student record system […] uses a number of default values in fields which, under the ELQ policy, now become highly significant. This has resulted in HEFCE inferring higher levels of non-ELQ students in our population and not picking up on SIVS[101] subjects within the programme.[102]

Oxford argued that HEFCE should not withhold grant as a consequence of a coding decision taken for reasons unrelated to the ELQ policy but should base such decisions on a count of actual ELQ students.[103] Oxford hoped that HEFCE would investigate carefully any appeals by universities.[104]

57. We have concerns that the data which HEFCE collected, before the withdrawal of funding for ELQ students was considered, may not be accurate and may result in higher education institutions losing grant to which they are entitled. We recommend that HEFCE institute a speedy appeals system that will allow higher education institutions to challenge the data about ELQ students on which grant, including the safety net, is calculated.

58 Q 101 Back

59 HEFCE, Withdrawal of funding for equivalent or lower qualifications (ELQs) Consultation on implementation, HEFCE Reference 2007/27, September 2007, paras 34-35, 39 Back

60 Q 127 Back

61 Q 70 Back

62 Q 127 Back

63 Qq 58-59; see also "The costs of alternative modes of delivery", A study for HEFCE by JM Consulting Ltd, August 2003,http://www.hefce.ac.uk/pubs/rdreports/2003/rd14_03/ . The report found (p. 12) the costs of teaching the types of part-time students it reviewed were higher than those of the equivalent proportion of full-time students due to three factors:

administration costs are often higher for a part-time student (headcount) than they are for a full-time student;

cohort sizes in evening and weekend study are generally smaller; and

pastoral support can be the same for a part-time student as for a full-time student.

The report cautioned costs available for the study were not robust, but an indication of the impact of these three factors. Back

64 Q 59 Back

65 Ev 266 Back