The Future of Higher Education

Written evidence from The UNITE Group

Executive Summary

The UNITE Group is one of the UK’s leading developers and managers of purpose built, professionally managed student accommodation, with 129 properties across 24 university cities, accommodating more than 40,000 students. It is also a listed FTSE 250 company and has to date invested almost £1 billion in developing and maintaining its portfolio of quality accommodation.

In summary the UNITE Group recognises that there is a need for the reform of higher education funding and access, both to address the current financial constraints of needing to reduce public expenditure to deal with the budget deficit, but also to enable higher education to become more self sustaining in the longer-term. However, there are a number of issues contained both within the Browne Report, and subsequent policy announcements, which we feel need to be further addressed in order to secure the viable long-term funding and access arrangements for higher education.

These have been addressed in this submission to relate to the broad themes of the committee’s inquiry as laid out in the call for written evidence. However, we would make clear at this point that due to the announced delay in the release of the Higher Education White Paper we have been unable to comment on, or assess the impact, of much of what is likely to be contained within the Paper. Therefore UNITE’s submission is based upon the key points of the Browne Review, subsequent policy announcements and Ministerial statements and our views on areas of potential policy considerations.

Overall UNITE would wish to see greater consideration given to the role accomodation has to play in making higher education accessible to potential applicants, as well as how innovative asset development and management plans can help to secure the longer-term funding stability within the HE sector. For UNITE does not believe that the proposals for reform will have a significant impact upon the underlying demand for student accomodation, despite the fall in overall numbers.

The Browne Report and the proposed White Paper on Higher Education

1.1 UNITE understands the approach laid out in the Browne Report and the need to reform the funding of the higher education system. UNITE appreciates that the public cost of higher education is high and is likely to increase as demand for university places continues to rise. If the sector is to become more self-funding over the medium to long-term then it is clear that universities must be able to capture a greater proportion of their income from their primary consumers - students. This is even more necessary at a time of reduced private income from contracts and endowment funds due to the current economic climate. It is clear, therefore, that the growing expansion of the sector has placed the current model of university financing beyond the limits of what was envisaged in the provisions within the Teaching and Higher Education Act 1998 and subsequently the Higher Education Act 2004, and that the current economic priorities of the Government have necessitated a wide-scale review into the sector’s funding.

1.2 UNITE accepts the notion that universities need to be given the ability, within certain limitations, to recapture a proportion of their costs through the freedom to be able to raise the cap on what they charge in terms of course tuition fees. Ultimately UNITE believes that the HE institution should to be free to determine its own level as long as that level was justifiable and complied with the relevant access criteria.

1.3 UNITE believes that the proposal to broaden access and participation for students from relatively less well-off backgrounds is to be welcomed as a means of promoting social mobility and contributing towards a more economically competitive workforce. However, we await further detail likely to be contained within the White Paper on the issues relating to this.

1.4 UNITE understands that the debate is still going on as to whether students should be given the option to be able to pay their tuition fees in advance. UNITE believes that this is a good option, should a student wish to pursue this route, and that it should not be ruled out at this stage. UNITE also believes this will also enable students to make more informed choices about the type and costs of accomodation they want during their time of study.

1.5 UNITE is supportive of the proposals to provide support for living costs, available to all, through an annual loan of £3,750 and the fact that access to this will not be means tested. As part of this UNITE also welcomes the additional support for students from families with an income below £60,000 per year, with up to £3,250 in grants.

1.6 However, UNITE does suggest that consideration is given to increasing this figure for areas of high accomodation cost - for example, applying a London weighting - where rents are significantly higher than other university towns and cities.

1.7 UNITE believes that greater consideration needs to be given to the role student accomodation has to play in deciding where students apply to study. For choices will not just be based upon the cost of tuition fees alone, but wider factors such as the cost and quality of student accomodation, and even its availability in areas of high application demand. UNITE therefore welcomes the requirement for universities to publish a Key Information Set by 2012, which will include information relating to accomodation costs etc.

1.8 UNITE therefore believes that further exploration should be undertaken to ensure that the supply of adequate accomodation is factored into the debate on participation and on the ability of institutions to expand their number of places per year. For such expansion could place significant pressure upon the supply of family housing within a local area and lead to tensions with the established community. Nationally the supply of good quality, well-located student accomodation continues to lag behind demand.

1.9 UNITE also considers that in certain areas accomodation, such as on-street housing in multiple occupation, may be restricted by changes to the rulings on HMOs and the proposed changes to Local Housing Allowance (LHA) levels which may result in students being squeezed out as cheaper rental properties are taken up by LHA occupants. This may have an impact particularly on the objectives of widening access and participation of those from more modest backgrounds. Therefore, UNITE believes that there is a need to ensure that the provision of accomodation for students does not have a detrimental impact upon housing provision for local residents

The role and future of state funding in higher education

2.1 UNITE shares the view that the state should continue to provide a significant proportion of the funding for higher education through the ‘block grant’. However, UNITE recognises that the proportion of overall funding to universities provided by the Government is under significant pressure due to continuing demand and the requirement for public expenditure reductions.

2.2 UNITE accepts the view that the current funding and finance systems for higher education are unsustainable and therefore need to be reformed.

2.3 UNITE believes that universities should be encouraged to identify other private sources of income and investment, such as income from research contracts and endowments. However, UNITE recognises that at present this is constrained due to the current economic climate and wider concerns relating to private donations following the recent reporting on the LSE and funding received from the Libyan Government.

2.4 As mentioned in paragraph 1.2 UNITE accepts and supports the need for students, under the proposed Student Finance Plan, to pay a greater proportion of the costs associated with their courses. However, as part of this greater focus needs to be given on the role of the student as an active consumer who is purchasing a very expensive product. As such, students need to be able to see that they are getting value for money for the increases in tuition fees and we welcome the proposal for the KIS which will help that happen.

2.5 UNITE does have some reservations relating to non UK students and how changes to Tier 4 could potentially deter the brightest and the best foreign students from wanting to study at UK higher education institutions. This is linked to the concerns held by many HEI’s over their ability to be able to recruit high calibre staff from overseas.

2.6 UNITE believes that insufficient attention has been given to the efficiency agenda, and that far greater consideration needs to be given as to how universities unlock greater efficiencies in how their resources are managed and developed, including their property assets and student accomodation. We feel that there is significant scope for ongoing efficiency savings to be made which will off-set overall levels of funding shortfalls in the short to medium term, whilst private funding remains subdued, but also with the longer term goal of making the higher education sector more sustainable and less reliant on the ‘block grant’ and on government capital funding.

2.7 UNITE believes that a good example of this is the need for greater outsourcing or sharing of so-called ‘back office functions’ such as procurement, IT, HR etc between institutions, much in the same way local authorities are combining to share services and functions to continue to provide core services. Whilst UNITE does not believe that HEIs need to be as radical further consideration does need to be given to outsourcing, thereby allowing a greater focus on the core activities.

2.8 One area where UNITE feels that particular focus needs to be given is that of student accomodation and how it is provided and managed. Many institutions have large estates of student accomodation which could be used more effectively, to both unlock capital for use in the university’s core mission, and reduce management and maintenance costs. For example, figures from the Higher Education Funding Council for England suggest that more than 90% of higher education institutions have had at least 10% of their buildings judged to be either inoperable and at serious risk of major breakdown or, worse, unfit for purpose - release of residential capacity would enable investment to improve this.

2.9 UNITE’s sector experience, therefore, could help universities understand how best to maximise value from their capital estates through a strong partnership approach, which can include options such as anything from outsourcing to nominations agreements and shared resources.

Conclusion

UNITE accepts the need for the reform of the system of financing for higher education institutions, and broadly accepts the principles laid out in the findings of the Browne Review. However, UNITE believes that greater consideration needs to be given as to the role student accomodation has to play, both in terms of unlocking efficiency savings but also in widening participation for students, especially if HE institutions and providers will be given the flexibility to vary intake numbers and new HE providers established in areas of high accomodation demand.

10 March 2011